Elizabeth Uva

How to Solve the Principal Agent Problem

Blog Post created by Elizabeth Uva Employee on Jul 6, 2016

This was originally posted by Kelli Mayes-Denker.

The principal-agent problem is often discussed in economics courses when looking at information costs and moral hazard. However, it is an issue that surfaces in every academic course. This concept is applicable to the example of professors choosing the textbook requirements for their students, and is increasingly relevant due to the rising prices of textbooks in recent years. Just last month, NPR examined the question of textbook costs in a Planet Money segment.

When a professor (agent) reviews textbooks and other learning resources, the choices made impact the students (principal). While it is the professor’s course, the unique differentiating factor is that the professor gets to choose how to spend the student’s money.

In a personal decision, one may weigh costs of a product by carefully determining the utility received in each option. However, when choosing textbooks, the student bears the cost, while the professor may be swayed by a variety of factors unrelated to price. These might include author philosophy, the amount of preparation for the course, departmental politics, etc.

How can you find resources that fit your teaching philosophy while remaining cost-effective for your students? At Sapling Learning, we understand this dilemma. Our focus is to provide a variety of textbook options so the best value can be determined for both you and your students. We call this freedom of choice. You can choose new or used editions from your favorite author, an ebook package, or even just stand-alone online homework.

Maybe you really like a specific author’s writing style, but the new edition of that textbook would cost your students $200 or more. We can adapt our assignments to fit that older edition, whereas the publisher would only allow assignments to fit the new edition. This simple option opens up tremendous possibilities for your students. They can purchase a textbook from the university bookstore or an online marketplace. They can rent a book, or borrow from a friend. If you’d like a more formal bundle option, we may be able to resell used copies of your textbook choice through our “Sapling Books” program, passing along more savings to your students.

Our textbook partners provide valuable ebook options at lower prices for students. Your students will experience the benefits of easy ebook interaction that boost learning, such as search functions, keeping e-notes, highlighting, skimming, and more.

We realize the options for course materials are numerous, and that multiple incentives drive each of us to make meaningful decisions. That’s why Sapling Learning gives you freedom of choice!