The Principal Agent Problem

The Principal Agent Problem occurs when one person (the agent) is allowed to make decisions on behalf of another person (the principal). In this situation, there are issues of moral hazard and conflicts of interest.

The Principal Agent Problem

Hayek’s Knowledge problem

Frequently mentioned as the most important essays in the history of economic thought, Hayek’s essay “The Use of Knowledge in Society” question the fundamental problem that economics exists to solve?

“The knowledge of the circumstances of which we must make use never exists in concentrated or integrated form,” explains Hayek, “but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”

In short he explains that for society to make the best use of all available resources it needs decentralisation together with a price system that communicates information to all market participants.

The Use of Knowledge in Society

Or why “do as you are told” is a bad idea.

In 1964, Stanley Milgram back then a young researcher at Yale University, published the results a famous experiment known to this day as the Milgram Experiment.

The set up is simple:

The subject of the experiment takes part himself in a (staged) experiment supposed to study the impact of pain on memory and learning.

For this, he is asked by the experimenter to administer increasingly strong electric shocks to a test subject for every wrong answer.

Of course, the test subject is an actor part of the experiment.

Milgram experiment reveal that more than 50% of tested subjects will administer shocks until the end of the experiment, up to the point where this would be lethal for the test subject.


A figure of authority can convince a regular person to kill, just because ordered to.



Now before you think this is old shit and that today, people are different:

Here is a video of the Milgram experiment re-enacted, and the results are very consistent with the original study:



A few more points:

  • This experiments has been re-enacted many times. Each time results have been quite consistent with the original experiment.
  • Men and women scored the same in a variation done on gender
  • Authority is important for this experiment to work (uniform, legitimacy, etc.)
  • Symbols of authorities are the result of a culture

A full detailed analysis of the protocol explains the procedure followed by the experiment and all the variations done to test different hypothesis.

For instance, the role of the uniform :

In the original baseline study – the experimenter wore a grey lab coat as a symbol of his authority (a kind of uniform). Milgram carried out a variation in which the experimenter was called away because of a phone call right at the start of the procedure.

The role of the experimenter was then taken over by an ‘ordinary member of the public’ ( a confederate) in everyday clothes rather than a lab coat. The obedience level dropped to 20%.

Or, if the participant could delegate his personal responsibility to press the button to somebody else, the obedience would increase.

When participants could instruct an assistant (confederate) to press the switches, 92.5% shocked to the maximum 450 volts. When there is less personal responsibility obedience increases. This relates to Milgram’s Agency Theory.

Which clearly give you a hint about why administrations are built the the way they are : the more level and sublevel of responsibility you have the less likely you will see any kind of resistance from an organisation.


#HR Implications:

Work ethic &  Personal responsibility

Milgram experiment is telling us one thing : when work ethic will be challenged by the management

  • to drive down quality at the expense of quantity
  • to steal, lie, cover things up
  • any kind of  crazy shit

Then, more than 50% of your staff will be statistically prone to comply and go forward even if he/she knows it goes against what should be acceptable in the work place.

When more than half of your organisation cannot prevent bad behaviour to happen, you have a problem.

Side note: As an employee, if you do not want to be a milgram-employee, then just be clear about your own standards and stick to your guns. Also, learn to sell. It helps.

Importance of culture in the company

A work culture where you put all the weight and the responsibility on management will be likely to generate more milgram-employee.

If you care about your organisation, you do not want milgram-people in your org.

If you care about long term, build a culture that will push for higher personal responsibility and work ethic.

One thing you need for that: content which you can use to educate your organisation, on a regular basis and at all levels.

A simple example of workshop you can run

Show your staff the Milgram experiment, then ask them to discuss how do they think they should react when ask to do stuff they don’t agree with even thought the manager tell them it is okay…




Full version of the experiment



But that's still a good stock photo for this article...

Millenials (people born after 1980 and before 2000) are defined as :

  • lazy
  • entitled
  • unattached
  • not motivated by money
  • want more holidays
  • more horseshit

The point of this post is to share a truth more and more commonly agreed upon: Millenials are not real.

“Millennials” as a concept is mainly a huge pile of crap.

And I just stumbled upon wonderful talk by Adam Conover, and I think he made the point pretty brilliantly so please what the talk down there.

But I have also tried to extract some of his point in this article because that’s really the essence of the 20 min.

TL;DR : People bash young generations. Every time. For centuries. Period.



Just more cute infographics that mean nothing


The reality is that Millennials (people born from 1980-2000) are not more nor less lazy than the generation before them.

However, what seems to be true is the obsession older generations have over the youth and how permanently disappointed they seems to be.

Hesiod, a a greek poet, contemporary of Homer (the guy who wrote of the Iliad and the Odyssey – if this ring a bell) wrote a few centuries ago about its younger contemporaries:



It is a pattern.

People are trying hard to bash the young generations.

Either because they do not understand them, or because it helps people feel more confident about their own dominance and social status.

(I tend to think the power struggle is real: and comforting a position for which people have worked hard for years is a vital need for every generation. And therefore, as people get older it is easier to go down the narrative that will try to single out the young generation and just complain about them…)

1968 – LIFE magazine is publishing an article to documenting the conclusion of conversations between Ernest Fladell and his nephew, in an attempt to bridge the generation gap. Fladell POV: the young people do not understand the meaning of earning a living… 

Then again, in the 1976, it seems like everyone is turning again into an entitled generation:

Let’s do that again in 1990 – post-boomer generation – soon to be called the “millenials” are tagged “Lazy” (I am sure Hesiod would have agreed…)


By now, you got the point.

Millenials are just people and that what the whole talk of of Adam Conover : “Millenials don’t exist” is about – but really worth a watch… he is really funny and provide much more details that I did here.

If you still have some energy, I’d suggest you check this interesting analysis published on the Irish Time “Young people have been letting us down since time immemorial”


The funny part: putting generations in a box never seems to stop.

Brace yourself, the new wave of horsecrap is coming – like this article of Business Insider : “Millenials are old news – everything you need to know about Gen-Z”

So I guess, we will soon have more article about Gen-Z being narcissistic and self-centered, lazy, and arrogants and what not.



 * Edit * 

From feedback I got (mainly from marketing folks) – I realised maybe there was room for confusion in the core message of the article. See, I am not saying segmentation is not a thing – nor am I saying cultural patterns of consumption do not exist – and yes, you can find a correlation between age and adoption of these patterns of consumption.

But the hype of Millennials – as if they were people completely foreign to human race – a lazy egocentric P.O.S equipped with a smartphone – is total BS – and what I see from board meetings to casual client reactions – is that when people talk about Millennials they usually refer prejudiced stereotype and not to the nuanced and carefully crafted marketing persona..



We are all different.

Color, Race, Religions.

Different brands of toothpaste.

Different opinions.

Lately, having different opinions is starting to turn into a real issue.


Up to a point where people can’t even have a conversation about it.

(Arguably, this was always the case, just that now, it seems it is getting harder to just ignore others’ opinions)


It is not always easy to to discuss.

Open conversations are hard.

It is even harder when both sides have strong opinions.


Well, Heineken just made a commercial about

Worth watching.



If only we could learn to talk to each other, we’d be in a much different place.

It will take more than a beer commercial to get there.

But it still remain a very nice move by Heineken.


It also confirms my opinion that businesses have a real role to play in creating content that can impact the world around them.

We live in the internet era.

Your voice matter.

Make it count.

Design is about solving problem

Art is about creating perspective

Both place the human dimension at the center of their craft

It is never about the tool or the medium per se

It is always about the experience

Imagination is the trigger

Pulling the trigger take you out of this world

Use text – images – sound – video – animation – sculpture – theatre – anything.

Take the weapon of your choice.

And shoot.


This is a doodle eating people