Triangle Arrangement

The standard principle agent model is bilateral; however, more often an agent deals with a secondary principle.  I personally have not associated with any strong examples of a triangle arrangement regarding an agent and two other parties.  However, I know that one of the main reasons why the housing crisis of 2008 was such a big deal was because of this triangle structure of cooperation. Essentially, many mortgage associations such as the Federal National Mortgage Association, which is commonly known as Fannie Mae, were involved in sub-prime lending.  Sub-prime lending is essentially the act of providing loans to people who have trouble repaying the loans in small increments.  This process eventually caused many Americans to drown in debt as they were unable to complete their mortgage payments and eventually many houses were foreclosed upon as collateral due to the initial loan being unable to be returned in full.

Essentially, this process was a triangle arrangement as many employees working for mortgage associations felt that they could appease their customers by providing loans despite the lack of qualifications of many borrowers.  Additionally, many employees may have believed that the more loans that they were able to issue to customers, the greater the likelihood of success in the workplace.  They believed they had an increased chance of attaining carrots such as a promotion or a monetary bonus from their employers or superiors.  Ultimately, the practice of sub-prime lending seemed to benefit both the employer and the borrower from the employees point of view at least initially.  However, the problem occurred when the borrower did not make adequate repayments of the loan and thus, the consequences were felt by all parties in the triangle arrangement.

Fundamentally, in this situation, the employer had a different view on good performance than both the borrower and the employee.  Of course, the employer wanted to provide more loans to borrowers just as the employee did; however, the main difference was that the employer wanted to adhere to the standards of lending practices and discouraged sub-prime lending.  However, the employees felt that they could get away with this and unfortunately, it was not the case.  Now the borrowers obviously felt good performance was based on whether or not they received the loan, so essentially, the employees were getting away with good performance from both the employer and borrowers perspective until the practices of sub-prime lending were revealed and then everyone suffered.

In order to resolve this tension and avoid this problem, one might conclude that it necessary to follow the strict lending procedures and avoid loaning to those who does not meet the adequate credit qualifications.  Although this may appease the employer, many borrowers may personally feel that this is not good performance from the employee as they believe that they are entitled to a loan, yet still denied.   Ultimately, it is hard to believe that there is another way to resolve the tension in a favorable manner other than following the rules.  The risk associated with breaking the rules is too great and I doubt many want a repeat of the housing crisis of 2008 in the future.

Parallel Experiences

Over the years I have been assigned to many group projects in school.  Many are successful and few are not.  However, it is not always so clear cut.  Many successful projects can have unsuccessful elements.  Last week I had to give a group presentation in my advanced composition class.  Essentially, the presentation was supposed to engage the classroom audience in an interactive discussion over racial tensions involving immigration and specifically the immigration of undocumented people.  Our presentation had to take 40 minutes; however, since our group had 8 people this did not seem like a big deal.  Essentially, our group had a singular group meeting where we brainstormed a list of topics regarding immigration.  Then we divided these topics among our group members and each member was responsible of presenting his or her designated topic in whatever way he or she wanted to.  Additionally, since the total presentation time was 40 minutes and since we had 8 people we decided that each person should be allocated 5 minutes.  This approach was interesting and successful for the most part since it transformed a large group presentation into multiple individual presentations on various subcategories on immigration which allowed for increased flexibility.  This presentation could be considered successful as everyone did their work because if they did not speak in the presentation for 5 minutes it would have been clearly noticed by the instructor.  However, there was still an unsuccessful element in the procedure and that would be transitions.  Since everyone had different ways of presenting their materials and topics, the group presentation was not very fluid and the transitions were awkward as they were unrehearsed.  Ultimately, however, the group presentation could be considered a success as everyone managed to contribute in a visible way.

Although many times successful projects could have a few unsuccessful elements, there are some projects that are abundantly unsuccessful.  When I was a freshman, I was studying to be a computer engineer.  In the first introductory course ECE 110 , the lab section forced students to form pairs in order to a create a small toy car for the final project.  Essentially, the car would have to be designed to pass various tests and would have to follow a set track that had many pitfalls such as zigzags, curves, and a fork in the road.  The car would have to be programmed to do this and we could not interfere with it once it was on the track. As a pair, my partner and I had 5 weeks to build this car and each week we would have 2 hours to work on the car in our lab section and we could work on it outside of class if we wanted to. However, this project was extremely unsuccessful due various unfortunate reasons.  A huge problem was the lab section was scheduled at 7:45 AM.  This caused me much grief as my partner kept oversleeping and missing the lab sections.  Since I was weak in circuitry and programming knowledge I was unable to get much work for the first 3 weeks without my partner.  Then he finally showed up on the fourth week and we scrambled to produce a car together.  Ultimately, our car ended up being garbage and did not pass all the tests and we received a low score for the project.  Although my partner did not show up for many critical weeks, part of the blame for such a poor result was on me.  I was unable to get much work done early on as I lacked critical knowledge and I did not actively seek assistance from the teaching assistant to make up for this.

Ultimately, these two cases are quite different.  Usually, when there are more people in a group like the first case I would think that it would be easier for a person to slack off.  However, our group managed to structure the assignment in a way that made it more like an individual assignment which made people motivated to do their own part.  However, in the second case the class timing and possibly the annoying quality of the given task caused my partner to be unmotivated to do the work.  Furthermore, I also may have been unmotivated for similar reasons despite showing up.  Another thing that is I have realized is that if the presentation is viewed by many people it may be more likely for people to do the work as they do not want to look foolish in front of their peers.  However, the car lab was only evaluated by the teacher and not given as a presentation in front of the other students, so there may have been a lack of motivation from that.  Although really in both cases there should be motivation as grades and learning are on the line.

Team Production

"How to Get the Rich to Share the Marbles" by Jonathan Haidt is quite an interesting opinion piece that discusses how people are more likely willing to share their excess wealth with those who do not have an abundance if there is an indication of an equal contribution.  However, many times even in group work many people feel like they are doing separate tasks or more work and thus, believe that their individual efforts should therefore, award them with different rewards or a greater proportion of a singular reward.

I have had various experiences with team production in college. One such experience occurred in my freshman year.  I was taking an introductory electrical and computer engineering course, ece110, and we had a write a group research paper on firewalls.  The groups were randomly assigned.  There was a high concentration of international students in this class and I ended up in a group with three international students and one domestic student.  This would not have been a big deal if we were solving computational problems or something related to the class.  However, we were tasked with writing a research paper on a topic we had not even remotely studied and this was a problem as the English skills of the international students were weaker than their domestic peers.  We divided the work equally, but the parts that the international students wrote were unacceptable to hand in for grading; therefore, the other domestic student and I had to edit and revise their parts in order to make the paper have a singular voice and be more fluid.  In order to compensate myself  for the additional work, I was able to voice my opinion in a peer evaluation form that we were all required to fill out regarding the group paper and this produced a small effect on my grade.

This situation was definitely a case where I did not believe that an equal distribution of grades was the right solution and favored increasing my own grade over others.  This relates to Jonathan Haidt's idea that people are less likely to equally distribute their reward if they feel that people are not doing the same amount of work or putting in the same amount of effort.  Jonathan Haidt addresses this by claiming that we should not blame the people in the experiment or in my case the people in my group.  Rather he claims that we should focus on procedural fairness and in his opinion piece he claims that those who make laws involving the economy also are colluding with the rich; thus, enabling the rich to stay rich and causing the income gap to widen.  However, in my team production example there was no colluding between the participants and the instructor, so it is hard to blame the instructor for the problems associated with the paper.  Ultimately, Haidt's conclusion regarding individual efforts and their corresponding rewards can be applied to many situations such as my example; however, assigning blame is a trickier ordeal and it did not match up in my case.

Illinibucks

It is hard to imagine that an introduction of something known as Illinibucks that allow people to move to the head of the line by the campus to ever be possible due to various issues.  People would want to use these Illinibucks mainly for the purpose of priority registration of classes.  Currently, class registration is based off of class standing in which seniors are able to register earlier than juniors, sophomores, and freshmen in that order because they have an urgency in terms of graduation and therefore, need to get into the classes they need.  Also there are those who have great academic success and they are known as James and Chancellor scholars and they also get priority registration before everyone else as a reward for their hard work.  These scholars often have to do demanding supplementary assignments in addition to their already demanding coursework and thus, are compensated with priority registration.

 Now if Illinibucks were introduced into the fray this would cause many headaches and undermine the whole system of priority.  Essentially students would get a set amount of Illinibucks from the campus and they could use it to get priority class registration privileges similar to those of the James and Chancellor scholars.  This would essentially diminish the reward of the honors program as people could pay their way for the same service as opposed to spending time and doing hard work.  Furthermore, if everyone had priority registration on a first come first serve basis by spending the Illinibucks, freshmen, sophmores, and juniors may take up classes that seniors urgently need which may cause them graduation headaches.  Additionally, if everyone uses these Illinibucks at the same time to register for classes the servers could crash as the registration process takes place online.  Also different classes may require different quantities of Illinibucks for priority registration and setting these prices would require extra work from the administration.  Furthermore, it would be difficult for administrators to set these prices as they have no set guidelines.  Ultimately, I would use my Illinibucks for class registration priorities over anything else as everyone needs to do this and I often have problems registering for the classes I need; however, there would just be too many issues to make this work.

Another plausible use of Illinibucks would be to use them to avoid physical queues.  For example, if you are extremely hungry or if you are running late you may want to use Illinibucks to bypass the queue and purchase whatever you need in a restaurant or even the Illini bookstore.  Additionally, a large market may form over Illinibucks.  People may sell or purchase Illinibucks for actual dollars.  This would allow people to pay their way with anything.  This would allow those students who come from wealthier families a much greater likelihood of bullying others in terms of priority.   Furthermore, if many people use Illinibucks at the same time there may be disputes regarding who gets priority first.  Ultimately, introducing Illinibucks would not be a good idea and would disturb social order and make processes less efficient.