Alice Rivlin ECON 490 Fall 2019

The standard principal-agent model involves only two parties, one principal, and one agent. The agent is helping the principal make decisions and actions based on the relatively abundant and professional information it possesses. In real life, however, there are some times one agent working for more than one principal, trying to help both of them better off at the same time. Sometimes due to the incapabilities of communication, work done by agent is not as efficient as it should be with respect to both principals. Furthermore, sometimes the agent utilizes such ineffective communication between the two principals to take advantage of them without neither of them knowing.  The tourism in China can be described as a three-party principal-agent model. The two principals are the local souvenir stores and the tourists, whereas the agent is the tourist agents of the tourism companies. The tourist agents are supposed to do two major jobs for the tourists and the local souvenir stores....

In social interactions, especially when it involves more than two people, conflict exists. It is that different people have different ways of processing the same situation, standing and watching the situation from different perspectives, hoping to get to different directions eventually. They may all have good intentions, but still, they are holding completely diverse opinions and solutions. When conflicts emerge, we can list out the core cause all the way to the result, trying to prevent the same or similar conflict from happening again. Solving conflicts and disagreement, after all, can be time-consuming,  which decreases the efficiency and productivity of the entire group. The fiction situation I picked comes from tv series The Night Shift. It is a series of story depicting a group of night-shift doctors and nurses working at San Antonio Memorial Hospital. Everyone in the doctor group is skillful and professional, whereas they all have different preferences for operating su...

Retrospect to the blog post assignment last week, the concept of sharing the marbles was introduced and discussed. It was basically saying that people are more willing to share their possessions with people in the middle of poorer situations when both parties are contributing efforts to the common project or goal. If the distribution of resources is allocated randomly, with no collaboration requiring or existing in the situation, sharing is less likely, if by any chance, happening. Bringing the same topic to a different level, this week, we are going to discuss whether the division of the reward based on the performance will actually improve the performance in the future, or on the contrary, do harm to the relationship among the team members. When making decisions and considerations in groups, the judgment is no longer based merely on the fairness of reward allocation. In fact, all the rewards and penalties are aiming at improving the performance and production in the future. I was ...

The ideas and theories in the three articles are intriguing. It is not surprising for me when I read some of the theories, such as those of the first and second article. People are more likely to share what they have with people who are in poorer conditions when they know that both parties are collaborating in, or putting effort into, the same goal. It is rarely the case that fairness exists. The rare existence of fairness does not necessarily mean there’s nothing we can do to equalize (or balance) all the parties. There are strategies alleviate the sense of unfairness. “I cut, you pick” and “tit for tat” work not only for children but also work for adults in teams or organizations. As long as both or multiple parties are making similarly equal amount of dedication or sacrifice, people won’t complain about the unfairness. The third article surprised me in that I always think people make choices and decisions for their own benefit. However, in fact, people do not make decision...

No one knows exactly what their future paths would be looking like until they make the actual steps into the future. Thus, all our decisions and actions are inevitably uncertain, with potential risks. When it comes to choosing majors and industries to study and work, our choices are made, considering both now and the future. One may choose his or her major because of his or her interest in the field, the difficulty of the required courses, the availability of academic sources in the college, and the accessibility of help from professors and advisors (to here and now). At the same time, he or she has to consider if jobs in this field will provide a high enough salary, the possibility of getting a promotion, or the job market demand (with respect to the future). I don’t know where I will be working in the future, nor what specifically I will do. However, I know I should make my decisions now as wise as possible to the future so that I will have more options to choose from with sufficient...

After a few weeks of reading prompts, brainstorming, and writing blog posts, I now have a better understanding of organizational structures and managemental aspect of maintaining a company ordered. The topic of the first-week blog post was about the efficiency of management according to our past experiences as an intern. The concept of transaction cost was also introduced. Transaction cost is basically every cost in an economic (or in real life, even a non-economic) activity. With respect to an organization, the goal is to maximize the efficiency with as least transaction cost as possible. Transaction cost also appeared In the week of discussion on team structures. Different team structures are suitable for different organizations, and they aim at improving the efficiency of management among the groups. The discussion of last week about  Illinibucks also has something to do with transaction cost, with respect to U of I staff and students this time. Illinibucks are created to make ...