Economic Lessons from Friends: Bad Employee Behavior
What incentives drive the decisions we see from Chandler, Rachel, and Joey?
Why do Joey, Chandler, and Rachel make decisions their bosses clearly wouldn’t approve of? The behavior of the Friends give us an opportunity to consider a common issue in economics: The Principal-Agent Problem. The Principal-Agent Problem refers to misaligned incentives and bad decisions that arise when one person/entity (the "agent") takes actions on behalf of another person/entity (the "principal").
In this video, we:
* Focus on the principal-agent problem, exploring incentives and behaviors in employment.
* Provide examples from "Friends" including: Joey giving free coffee to attractive women; Rachel's revenge tactics, and hiring based on personal attraction; and Chandler's behavior leading to office trashing, showcasing misaligned incentives between bosses and employees.
* Suggestions for aligning incentives: compensation structures, bonuses, profit sharing, and tournaments in the labor market.
Watch this video to see the clips and hear my analysis:
The hit series "Friends" is a world wide beloved sitcom following the lives of Rachel, Ross, Monica, Chandler, Joey, and Phoebe as they navigate their personal and professional lives in New York City.