The Principal - Netflix

Set in a boy's high school, this four part drama series features AACTA award-winning Alex Dimitriades who plays the role of Matt Bashir, a former history teacher and Deputy Principal at a prestigious girls' school, who is promoted to Principal of Boxdale Boys High.

Boxdale Boys High is a notoriously violent and difficult school and Principal Bashir is brought in because of his different and radical approach to reform. The sudden change brings him into conflict on all fronts and even leaves his personal life exposed. Still, Bashir works overtime to get the local community on side, promising change, but just when it seems he is making progress, a student is found dead on school grounds.

The Principal - Netflix

Type: Scripted

Languages: English

Status: Ended

Runtime: 60 minutes

Premier: 2015-10-07

The Principal - Principal–agent problem - Netflix

The principal–agent problem, in political science and economics, (also known as agency dilemma or the agency problem) occurs when one person or entity (the “agent”) is able to make decisions and/or take actions on behalf of, or that impact, another person or entity: the “principal”. This dilemma exists in circumstances where agents are motivated to act in their own best interests, which are contrary to those of their principals, and is an example of moral hazard. Common examples of this relationship include corporate management (agent) and shareholders (principal), politicians (agent) and voters (principal), or brokers (agent) and markets (buyers and sellers, principals). Consider a legal client (the principal) wondering whether their lawyer (the agent) is recommending protracted legal proceedings because it is truly necessary for the client's well being, or because it will generate income for the lawyer. In fact the problem can arise in almost any context where one party is being paid by another to do something where the agent has a small or nonexistent share in the outcome, whether in formal employment or a negotiated deal such as paying for household jobs or car repairs. The problem arises where the two parties have different interests and asymmetric information (the agent having more information), such that the principal cannot directly ensure that the agent is always acting in their (the principal's) best interest, particularly when activities that are useful to the principal are costly to the agent, and where elements of what the agent does are costly for the principal to observe (see moral hazard and conflict of interest). Often, the principal may be sufficiently concerned at the possibility of being exploited by the agent that they choose not to enter into the transaction at all, when it would have been mutually beneficial: a suboptimal outcome that can lower welfare overall. The deviation from the principal's interest by the agent is called “agency costs”. Besides the agency problem between shareholders and managers, there is also another type of agency problem: the one derived from the existence of big shareholders and small shareholders, which is quite a common phenomenon in a listed company. In the process of dividend distribution, there exists not only information asymmetry but the different influence between big and small shareholders. Small shareholders' behaviors are affected by the big shareholders' decision; in return, they can also impact the big shareholders' decision but not significantly. Under such circumstance, the big shareholders will encroach on the interests by dividend policy. Various mechanisms may be used to align the interests of the agent with those of the principal. In employment, employers (principal) may use piece rates/commissions, profit sharing, efficiency wages, performance measurement (including financial statements), the agent posting a bond, or the threat of termination of employment to align worker interests with their own.

The Principal - Empirical evidence - Netflix

There is however considerable empirical evidence of a positive effect of compensation on performance (although the studies usually involve “simple” jobs where aggregate measures of performance are available, which is where piece rates should be most effective). In one study, Lazear (1996) saw productivity rising by 44% (and wages by 10%) in a change from salary to piece rates, with a half of the productivity gain due to worker selection effects. Research shows that pay for performance increases performance when the task at hand is more repetitive, and reduces performance when the task at hand requires more creative thinking. Paarsch and Shearer (1996) also find evidence supportive of incentive and productivity effects from piece rates, as do Banker, Lee, and Potter (1996), although the latter do not distinguish between incentive and worker selection effects. Rutherford, Springer and Yavas (2005) find evidence of agency problems in residential real estate by showing that real estate agents sell their own houses at a price premium of approximately 4.5% compared to their clients' houses. Fernie and Metcalf (1996) find that top British jockeys perform significantly better when offered percentage of prize money for winning races compared to being on fixed retainers. McMillan, Whalley and Zhu (1989) and Groves et al. (1994) look at Chinese agricultural and industrial data respectively and find significant incentive effects. Kahn and Sherer (1990) find that better evaluations of white-collar office workers were achieved by those employees who had a steeper relation between evaluations and pay. Nikkinen and Sahlström (2004) find empirical evidence that agency theory can be used, at least to some extent, to explain financial audit fees internationally. There is very little correlation between performance pay of CEO's and the success of the companies they manage.

The Principal - References - Netflix