Example of Personal Reputation

I'm going to use a somewhat geeky reference for this post and discuss the fantasy football league I participate in with a few of my buddies from high school.

When I was a sophomore in high school, a friend of mine and I joined our school's fantasy football league which was ran by our Physics teacher and an all all-around cool cat Mr. Maruna along with a few older students. After winning the league in my first year (no bragging here, it was all complete luck), I couldn't get enough of the "sport." So the next year, after many of the other guys in the league had graduated, my buddy and I took it upon ourselves to help Mr. Maruna out with getting a league together. In fact, I think (know) we were far more excited about the league than even he was. After we graduated, we of course wanted to keep a league of Routt guys together so we started an "alumni" league, I guess you could call it and got several of the guys we had played with in high school together. Without Mr. Maruna who we didn't think would want to play in a league with a bunch of old students, I became the new Commissioner.

As Commissioner, I'm in charge of getting the league together each year, creating rules and regulations, making sure everyone has paid their dues and plays fair, allowing/vetoing trades, etc.. I feel I've built a large degree of trust with the guys in the league over time. Of course there is always the jokes of corruption and collusion, but they all seem to trust that I always make my decisions based on the good of the league as opposed to just myself since I have a team like everyone else. In fact,since we actually have a decent amount of turnover in this league due to busy college schedules etc., I've tried to build trust with newcomers by absolving some of my executive power in the league in a few ways. For one, we take league wide votes on major decisions, such as the establishment of a "keeper" rule (keeping a player on your team from the previous season), since it drastically changes the approach one takes to building a fantasy team. Also, I have put together a council for trade evaluation in which 3 other veterans of the league along with myself determine whether a trade should be allowed or vetoed. This way, I personally cannot make an unfair trade without being checked by the council. 

I try never to make any trades that could be considered unfair myself, not only because I will be called out and my reputation will be damaged, but also because I don't like ruining another team's chances to win. I know from experience that once your team falls out of the race for the playoffs, fantasy becomes a real bummer and that could sully the chances that that player returns for the next season. This is also why I sometimes offer advice to the lesser experienced guys as to whether they should make that trade or pickup they were considering. I feel that may also help my reputation with guys in the league and be another example of how I put the league before my own team.

It can be difficult to not "cash-in" and take advantage of other guys' naivety, especially when my own team is lacking. When another team has a superstar and nobody else, it's easy enough to sell your lesser players for more than their worth considering the guy you're selling them to trusts you to be a man of your word. Therefore, I try to make sure the other guy knows what he's getting and giving up and instead of pulling the wool over their eyes, I trade them players that could help them but I can't necessarily use myself in exchange for guys they may not value as much as I do. This strategy has been quite successful over the past couple of years. I've sharpened my ability to find value in players and I've kept my rep with the league in tact. 

Example of Principal-Agent Model

In the midterm elections this past week, there was a proposition on the ballot in Illinois for a potential minimum wage increase which would eventually make its way to $10/hour. Of course, this was just an advisory question to take the temperature of those in favor of such a delegation. Instead, the governor and state congress will be responsible for passing or rejecting this bill. In thinking about this issue further, I thought about how vastly different the sides voting for or against were in regard to this bill. There are many (specifically minimum wage workers) that could benefit from an increase in wages, at least in the short run before inflation takes effect. On the other side, there are many (specifically minimum wage employers) would would suffer from an wage increase. Of course there are too many effects of a large-scale wage increase to discuss in a single blog post, unemployment, inflation, tax revenue and production volume to name a few. However, I still would like to discuss how the government as a whole would go about determining whether or not this law should be passed. This isn't so much a case of an agent trying to please two principals, but rather one in which the agent must choose between them.

Of course, most politicians are tied to the views of their party and therefore will work solely toward the platform they've run on (or so we assume). This ultimately is how the politicians will be judged in the future. If they succeed in passing/blocking the laws they promised their voters they would, then they will likely be re-elected. Otherwise, they could get the boot. This fact essentially answers my question about which way the government will act. However, I would like to assume the government were a bi-partial entity with no allegiance to either party. How would such an entity approach this issue?

The proposition itself is a single yes-no question: Raise minimum wage or not? Because of this, once the government (agent) makes their decision, they will have seemingly chosen a side, pleasing some and angering others. Should the agent simply choose whichever side is larger? Ergo choose the answer that received more votes on the ballot on election day? Perhaps. Although, I believe that vote many be misleading as to which decision is truly better considering there are far more employees than employers in the private sector. 

There is another way to attack this situation which I think may be best, although it may not yield the popularity of being the best option by the widespread public. The government should look at the situation not on the basis of "who many people will be helped by each ruling?" nor "what ruling makes the most positive impact immediately?" Instead, the governing body needs to analyze the situation from a purely objective and economic standpoint. If minimum wage increases, what will be the short and long-term effects on workers? Businesses? State GDP? State Income Tax revenue? Unemployment? Inflation? There are countless effects of this potential law that need to be analyzed. Eventually, the result should be that the state economy as a whole (key word) will be better off under one ruling or the other. Using Macroeconomics and a bit of Micro as well along with existing policies and economic climate, the government should be able to at least decide which choice would be a better bet for a better tomorrow. Of course, even when determining the (potentially) better choice, the governing body still must make an arbitrary ruling on the proposition, which will anger one side or the other, perhaps because they don't understand the expected outcomes or because they know they personally will likely be hurt (at least in the short-run) even if the state as a whole is better off.

Of course, this isn't quite how the system works. Politicians are not bi-partial but rather completely one-sided. Therefore, whichever party is in power will make the ruling they wish, as decided by their voters hopefully. This throws a bit of a wrench in my quandary, as it seems that each politicians serves a single principal, their voters. Still, I thought it was interesting to explore the idea as a whole considering the clear differences in interest of employees vs. employers, specifically.   

Example of Conflict in the Workplace

For this prompt, I thought I would use as an example my favorite movie and book, Moneyball. In this story, the main character, Oakland Athletics General Manager Billy Beane (played by Brad Pitt in the film), faces the challenge of putting together a competitive baseball team despite having a payroll far less flexible than many of the other competing teams in the American League. After the 2001 season in which his A's were defeated in the playoffs by the New York Yankees who boasted nearly triple the payroll of the A's, several key A's players leave the team via free agency to sign with teams that could afford to pay them far more the Oakland could. In order to fill holes on the rosters without spending very much money both in the short and long-term future, Beane knew he had to approach free agency and the draft differently. Therefore, he turned to sabermetrics, the science and empirical analysis of baseball statistics. Using sabermetrics, Beane hoped to find value in players that other teams didn't see. However, this strategy also required that Beane overlook aspects of baseball and baseball players that others in the industry did value, including many within his own organization. This is where the conflict comes in. Beane's outlook conflicts with scouting director Grady Fuson (Ken Medlock) and manager Art Howe (Philip Seymour Hoffman), both of whom believe in the more traditional approach to baseball operations. 

This conflict (Since Fuson and Howe have similar takes on baseball operations, I'll lump everything in as one conflict despite Beane having separate run-ins with Fuson and Howe) stems from a fundamental disagreement on how a baseball team should be put together and utilized on the field, but it goes much deeper than simply wanting what is best for the team for both sides. 

Beane realizes if he continues to approach building his team the same way as other organizations do, he'll lose because other clubs can simply outspend him. Therefore, he decides to find the most efficient way possible to put a team together. Through studying the sabermetric teachings of Bill James, Beane and his Assistant GM Paul DePodesta (named Peter Brand and played by Jonah Hill in the film) determine that the two statistics most closely correlated to scoring runs are On-Base Percentage (OBP) and Slugging Percentage. All other stats have lesser influence on scoring runs and therefore winning games. Therefore, Beane decides to go after free agents and amateur players based solely on their career OBP and Slugging. In doing this, Beane is able to find several players who other teams wouldn't look twice at. This raises eyebrows in Beane's scouting department. Fuson argues that these players cannot play as they are un-athletic, play poor defense, and lack raw power, an understandable argument coming from a scout whose job it is to find the most talented players in the world. Beane dismisses Fuson, noting that those other aspects, those that Fuson values, don't matter to him. 

When it comes to putting these players into the lineup, Howe refuses, applying the same logic as Fuson, that the players Beane has added are less talented and therefore shouldn't play. When Howe repeatedly disobeys Beane's orders to play the the players as Beane designed them to be played, Beane trades away the players in front of those he preferred on the depth chart, forcing Howe to play the players as Beane wants. 

Fuson and Howe could simply say, "oh well, Billy's the boss. If this fails, it's on him.", but that would not only violate their fundamental beliefs about baseball, which had been molded over decades in the industry, but would also endanger their future in the industry. In baseball, individuals are evaluated by the decisions they've made throughout their career. They are judged by these decisions even when they belong to someone else. If Howe would have played the players Beane demanded him to and those players were to have played poorly, it would be Howe that received the criticism from fans and the media. Also, he wouldn't be able to explain it in job interviews for managerial jobs in the future. He would either have to take the blame for the poor decision or admit that he was steamrolled by his own GM. Why was this a major problem for Howe? I mentioned earlier how thin the budget was in Oakland. With players being run in and out, Howe could bet he wouldn't last long there no matter how well he did. If the organization wouldn't put their faith in him with a contract extension, why should he put faith in their system, which could seriously damage his reputation? The same goes for Fuson, who felt his position would be all but obsolete with Beane ignoring scouting reports and basing decision solely on statistics. Both Howe and Fuson would have to take on a great amount of risk in order to follow Beane's orders, and considering Oakland would unlikely retain either even if the plan succeeds, the positive outcome was minuscule comparatively.

Despite Fuson and Howe feeling similarly about the situation, the two experience far different outcomes. Fuson resigns after getting into a verbal altercation with Beane (or so the movie depicts). In reality, Fuson left the organization for a Assistant GM postion with the Texas Rangers. Howe, on the other hand, lets the team be after Beane ties his hands and when the team eventually succeeds, Howe receives a fair amount of the credit. 

This shows that this particular conflict had very different potential outcomes. The interesting part of these outcomes is that they were reached through almost the set of circumstances. Neither Beane nor Howe made any compromises in order to reach a different outcome than Beane reached with Fuson. Perhaps Howe did give Beane a longer leash than Fuson did before he walked away from the organization. The important thing to note about the outcome and the conflict in general is that Beane, acting as the superior with control over the situation, would not have compromised on his strategy regardless of the consequences. He was ready to see his plan through even if meant losing his job in the case that his plan failed. 

This outlook of Beane's verges on opportunism when it comes to others in the organization, namely Fuson. As I mentioned earlier, the statistical element to Beane's decision making process to an extent replaced the scouting element. If Beane doesn't care about how athletic a player is or how his swing looks, why even bother with scouting? Beane's opportunity to find players at a better value to the organization meant potentially making the entire scouting department, including Fuson, obsolete and non-essential. The only step further Beane could have went with this process was to eliminate the scouting department altogether, which would cost several people their jobs. 

That action would have been one of several transaction costs of the new baseball operations system. "Adapt or die" Beane says in the film. Howe and Fuson were just two of many within the organization who had to either completely change their own approach to the game they had played and/or studied for years or find another job. 

Ultimately, Beane's plan was successful. The A's went onto earn the American League's best record in 2002 and Beane's system was implemented by several other organizations throughout baseball as a pinnacle of efficiency in a sport where efficiency was sorely needed. However, I don't believe one could argue very effectively that the specific conflict I've described went as well as it could have. Beane essentially worked around both Fuson and Howe, taking the bat out of their hands you might say. In an organization in which employees aren't as easily expendable, Beane almost surely wouldn't be able to treat Howe and Fuson as he did.