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.