John goes to the doctor for a chronically upset stomach. His doctor prescribes him some new medicine that is created and marketed by pharmaceutical companies, but it doesn’t help, and actually gives John some nasty side effects. Several medications are given to try and take care of John’s initial problem as well as side effects created by other pills, but to no avail. John lives on with his illness. They can’t figure out what’s wrong with him. One day John takes matters into his own hand, does a simple 23andme genetic test and finds out he is prone to celiac disease. So he eliminates wheat from his diet, and his lifelong problems disappear in a couple of days. Fun fact: Every year at least 12 million Americans are diagnosed with a medical problem they don’t have. 

Jessica is using one recruitment agencies help to look for a new job. She’s presented with an attractive offer from one company and the recruiter pushes her eagerly to accept the offer. Upon joining, she finds out that the position is very different than what she expected. The recruiter seems clueless and shortly becomes unresponsive with an indefinite “out of office” message, leaving Jessica to figure things out on her own. Fun fact: I was a recruiter and often times recruiters don’t have all the information you might need to make a decision…like what the precise nature of their client’s job is.

Jason has been working hard in his job as a teacher for the past 10 years. He is diligently saving 20% out of his monthly paycheck; money he plans to spend on his daughter’s education. One day, he wakes up and finds that 50% of the money that he thought was “safe” in his bank is gone. Unfortunately, Jason lives in Cyprus, and like many others, he had his uninsured life savings significantly wiped. Fun fact: Over 57% of people in the US have $1k or less in savings and would get financially annihilated in a Cyprus/Argentina/Ukraine situation. It’s not real until it is.

The Agency Problem

We tend to think that the professionals and experts in our lives are infallible, or at the least trustable. But there’s a constant stream of evidence to suggest otherwise — the opioid epidemic, the financial crisis, the sky rocketing rate of obesity, and high rates of unengaged employees. The issues are no one particular persons “fault” but rather, symptoms of a complex world. A world that often seems too out of our control. While we might feel like we are helpless to these bigger problems at times, in fact, we have a lot more power than we realize.

Many of these symptoms come down to the “agency problem,” which simply means that middlemen have their own incentives that are rarely aligned with ours, leading to negative results for us. It’s the classic case of the sleazy car salesman who sold you a car fraught with mechanical issues. In some cases, misaligned incentives can be a matter of life and death (in case of medical), fun job vs. life-sucking dead-end job, nice house vs. moldy, dilapidated wreck, good car vs. piece of shit that breaks down all the time, lots of money vs. begging for tater tots on the side of the highway with no shoes. Of course, these differ from the situations where you may be ripped off for $5 or $10 in a new city while traveling because your taxi driver took the ‘scenic route’ (the relationship is asymmetrical as he has information you don’t have). For those situations it’s probably better to take a chill pill, laugh and move on with your life.

But the bigger agency problem does affect us all often on a day-to-day basis and thus worth addressing — how do we get past it? Perhaps the first step is taking ownership for these problems as ours and get away from a victim-mentality (i.e “it’s the recruiters fault, not mine!”). Your health is your responsibility, not your doctor’s. Your money is your responsibility, not your bank’s. Your career is your responsibility, not your recruiter’s. We’ve all had bad luck in our lives, but at the same time we also do have the fantastic opportunity to think for ourselves — it’s easier than ever, especially considering our access to information.

With that said, it can be difficult to make the best decisions, especially when society has ingrained certain beliefs in us and when we become over-dependent on the experts around us. Here are some smart tactics you can use to make better decisions in these ‘agency’ situations, specifically when dealing with banks, recruiters, and doctors — people you are likely to encounter. But I’m sure you can apply these to other middlemen (insurance agents, real estate agents, etc):

• Don’t be trigger-happy. The worst decisions I’ve made have been emotional and impulsive — perhaps you can relate. Simply allowing an extra day to decide allows you to detach from this natural, human tendency. You can now research the side effects of that medicine, do your due diligence on that job offer, or debate the pros and cons of buying vs renting a home — and think it over. During my time as a recruiter, I found that the best job seekers never agreed to apply for a job (despite my friendly sales-pitch) when I spoke to them on the phone — they always waited a couple of days as they spoke to their friends, ex-coworkers, and searched online.

• Get a second opinion. Don’t take someone else’s opinion as fact, but also don’t isolate yourself from the experiences and ideas of others that could be helpful. Talk to more than one recruiter, more than one bank, and more than one doctor. Taking it a step further, talk to people in that industry that don’t have an incentive, like ex-bankers, ex-doctors, and ex-recruiters who no longer have something to sell you.

• Diversify your options. In the case of finance, putting all your eggs in one basket is a risk; it’s cliche but it’s true. Spreading your money across different asset classes and investments could save you from getting wiped out. For example, you could buy a few gold coins and actually keep them in your home. While this may sound impractical, the barrier to buy gold is low, so having some extra peace of mind comes at a pretty small cost. Or you could get bitcoin. Similarly, having multiple job interviews will give you more opportunities and you’re less likely to be pigeonholed into one job offer. And instead of taking your doctors idea to take X medicine at face-value, ask him if there are any other solutions that he can think of. If he can’t, take a day to mull it over and do more research.

• Read a lot. Read books, peer-reviewed journals and be careful not to use the Huffington Post to make imporant life decisions. There’s a lot of great content online that goes beyond the conventional wisdom that is mostly free and at your fingertips. Most doctors are not trained in nutrition during med school (surprised?), so you might actually have more up to date information. Most recruiters are focused on selling you one job idea, so might not be aware of other opportunities outside of their clients. Most (if not, all) banks want your money, so it’s your responsibility to keep your money safe, not your banks.

• Don’t be afraid to confront somebody. The consequences of contradiction and confrontation are typically very low — you’re unlikely to get into a physical fight. However, whenever a professional suggests something we tend to take it as fact. Rather, we should be inquisitive by asking questions. Why do you suggest this? Can you explain this in more detail? Are there other options? Or simply, “I have to do more research, let me get back to you,” in where you can defer confrontation until you have more information yourself.

These ideas probably seem reasonable to you but it’s often easier said than done. That’s because we’re usually not programmed to function like this, or we’re too busy, or we forget. The next step, then, is to print this list out and stick it on your computer or your phone’s screensaver where it’s visible. Then, use it for the next big (or small) decision going to a doctor, recruiter, or bank. Start small, take your time, and I think you’ll get something from it.

Interestingly, the agency problem is what blockchain technologies are all about — cutting out the middleman and increasing trust. Of course, this will take time to come to fruition, integrate and actually have an impact in our lives, especially considering blockchain is disrupting multi-billion or trillion dollar industries. This is why I’m very exciting about blockchain.

But that’s years away.

For now, we have to actively and consciously deal with the agency problem ourselves. On a personal level we must take responsibility for our decisions to the best of our ability. Fortunately this is within our reach, today.