Friday, November 1, 2013

Principal-Agent Model

The first two triangle arrangements I’ve participated in that came into my mind were the triangle arrangement that occurs when I am at work, trying to solve a problem for a customer, and the triangle arrangement that has occurred within my family as a result of my parent’s divorce.

As I’ve mentioned in previous posts, I work at a bank in downtown Champaign. I work as a Customer Service/New Accounts Representative. When a customer comes into the bank or calls with a problem, it is my job to do what I can to solve the problem. This sometimes means that I need to represent the customer and whatever their issue is when speaking with people or calling around to help resolve the issue. I also, however, am obviously still an agent of the bank and am representing the bank while I help the customer.

A specific example of when this occurs is when a customer sees a charge on their account that they think shouldn’t be there. I have to get information from the customer and have them fill out a form, and then I typically end up speaking with the bank employee who looks into those disputes. When I speak to her, I explain the customer’s issue and the reasons why they think the charge is illegitimate, and so in that sense I am acting as an agent for the customer. At the same time, I am an agent of the bank because I am a bank employee, and ultimately I have to call the customer back and explain to them how the bank is going to handle the issue. If there is every any tension, so in this example, if the bank employee I spoke with says they think the charge is legitimate, I will often restated the customer’s argument against that point, and in my experience so far, the result is that the charge gets refunded but the bank won’t return a charge from the same company again. The tension, in this circumstance, usually ends up getting resolved with that type of compromise. However, if it came down to it, I would definitely satisfy the bank while ignoring the need of the customer (to get the charge refunded).

I am uncertain if this example completely applies, however, because I am only acting as an agent for the customer because that is what being an agent of the bank requires, so in that sense, dealing with the customer is not dealing with a separate principal, but instead a part of dealing with the bank’s principal. This makes my performance in the view of the bank take complete precedence over my performance in the view of the customer.

The other example I mentioned is a much more clear fit with the bilateral principal-agent model. My parents got divorced when I was seven, and have continued fighting almost constantly ever since. This means that I was often in the middle of an argument, or being asked to do different things by each parent. One example of this would be a situation in which I a family event on my mother’s side was occurring during time I was scheduled to be with my father. My mother would count it as good performance only if I told my father I wouldn’t see him so I could go to the event, and my father would only count the opposite (if I told my mother I couldn’t go to the event because I wanted to see my father) as good performance.


Situations in which there was this type of tension because the two agents (my parents) had different goals and expectations occurred very frequently. There would typically be many ways to resolve the situation, be that completely taking ‘one side’ or picking some variation of a compromise. Typically though, most options would end up with the agent (myself) failing by satisfying one ‘master’ at least partially, and ignoring the other. In practice, I usually tried to stick with the least confrontational approach; I would usually try to find some sort of compromise that would not make either of my parents completely happy, but would not make either completely unsatisfied either.

2 comments:

  1. Both interesting examples, but I'm not sure either fits perfectly with what the prompt says. In the bank case, you wrote yourself in the fourth paragraph that it might not be a perfect fit. So let's see if we can reason that through. Are you supposed to route all queries of this sort or are you empowered to address some yourself, for example, if you feel the the charge is legit and the customer should pay it. If you must route all queries, then it would seem you are just doing your job. If you can so no to the customer yourself and you route only those queries that are in some gray area or there really was a mistake, then perhaps this is like the prompt, particularly if the customer persuades you that it is in the gray area, where if you got the request via email, you could be more objective about it.

    On the situation with your parent, I feel for you, but a kids relationship with parents isn't normally considered from a principal-agent view, unless there is some work that is part of it (like caring for younger siblings or taking care of a house or something like that). There is no doubt about you being tugged in multiple directions. It's just that calling it a principal-agent situation is a stretch.

    ReplyDelete
  2. To respond to the first part of your comment, I am supposed to rout all queries. What I have the chose to do or not do is to argue for the customers point. I have been able to convince the employee who looks at these charges to refund a charge that she was not going to refund, because I believed the customer and argued for their sake. So it is like the post in that I have the choice to let the ruling about the charge stand, or to try to change the decision.

    As for the situation with my parents, often times this situation would involve some type of 'work'. An example of this would be having to relay messages and represent the opinion of the other parent, or having to get one parent to agree to a custody schedule or sign a certain document for the other parent. I agree that this example does not fit perfectly, I was looking at it more as an example for having to act when there are two different entities with different goals looking at the action.

    ReplyDelete