The Principle-Agent problem means the motivation of
one party (usually the agent) to act on behalf of another (the principal). Agency
problems arise in a variety of different contexts, and arise when the
incentives between the agent and the principal are not perfectly aligned and
conflicts of interest arise. As a result the agent may be tempted to act in his
or her own interest rather the principal’s. Conflicts of interest are almost
inevitable.
One of the famous example that pops out of my mind is
the Enron scandal revealed in 2001, which eventually led to the bankruptcy of
the Enron Corporation and the dissolution of Arthur Anderson. Enron's board of
directors, many analysts believe, failed to carry out its regulatory role in
the company and rejected its oversight responsibilities, causing the company to
venture into illegal activity. Company leadership, including boards of
directors and the executive team, does not necessarily have the same interests
as shareholders. It is believed that a lack of alignment between shareholders
and directors may be the final cause of Enron’s demise.
However, as the prompt states, the situation in
reality is often more like a triangle- the agent deals with two different principals.
Speaking of which, I would like to share my own experience. When my freshman
year was over, I went back to China. During the summer, I was employed by an
English teaching agency. My job was to teach in an English boost camp for
middle school student. The size of the class was not big (around 20-25 people),
and students came to the agency on a daily base. The class was supposed to
design to improve students’ test results and overall English skills. Thus, the
agendas were basically focused on doing exercises and analyzing them. Here are
some examples of the exercises that were related to the test:
As we can tell,
English tests in China concentrate a lot in
Gradually, students started showing positive feedback.
Nonetheless, my supervisor didn't agree with my teaching concept and asked me to change it back to the original one. He told me that what I was doing couldn’t
improve students’ abilities to take exams. I then had an argument with him. Because
I believed that English skills were not only limited to taking exams. English
skills were more about expressing one’s thoughts, understanding other’s
conversation, and starting appreciating its beauty. None of us chose to back
up, and I ended up getting fired.
I think there definitely are more than one way to
resolve such tension. But the choices are depending on the negotiation. I am
aware that in the economic world, regulations are often used to solve principal-
agent problem. Nevertheless, after reading Gary J. Miller’s “Solution to
Principal-Agent Problems in firms”, I agreed with Miller’s opinion that there is
no unique “solution” to the principal-agent problems in a firm. Instead, a
Coasean “contingency” theory can be constructed in which different conditions
inside the firm (characterized by production technology, severity of information
asymmetry, and relative risk-preferences of principals and agents) call for
different “solutions” to the principal-agent problems.
As it turns out, my mother was a language teacher and she also had a tutoring business at home so I saw this played out over and over again. Grammar is easier to test than listening and speaking skills. So in a country where performance is measured by exams, it will created a bias in the process and produce a triangle, as you say.
ReplyDeleteI believe a better approach is some mix between the reading skills, which are grammar based, and the listening and speaking skills, which are vocabulary based, as you suggest. Mixed approaches like this might require smaller class size than what you had and also more time practicing in smaller groups.
Now I want to change directions here and ask that you email me so we can set up a one-on-one meeting to discuss your participation in the class. Please do that at your earliest convenience.
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