From the moment I got my license and my parent's hand-me-down car for my 16th birthday, I was instructed on the importance of getting my oil changed every 3,000 miles or every 6 months. I hit six months before 3,000 miles, so when I was 16 and a half and I first needed to change my oil, I went to what I thought was the most efficient and least costly specialty automotive oil change shop ... Jiffy Lube.
At the all-knowing age of 16, I insisted my parents did not need to come with me and that I could handle this monumental and adult-like moment. I walked in, told the manager at the counter I needed an oil change, gave him my keys, and waited in the lobby for about an hour before they called me back to my car. Much to my surprise, the car mechanic told me that he completed the oil change but said my car NEEDED a tire rotation, tire air pressure check and filling, and a battery inspection because my car was older. Me, again being a genius 16-year-old, completely trusted the mechanic and decided to pay the extra money to keep my car in great shape. When I got home and my parents asked me why it took so long, I explained how the mechanic insisted I needed other services done to my car. Horrified at the extra amount of money I spent (my parents are very frugal), I got a stern lecture about the costliness of falling into the trap of listening and acting on the car mechanic's suggestions. They insisted he had scammed me knowing I was an easy target!
Looking back on this, what I didn't realize was that my parents were actually lecturing me on the principle-agent problem. The principal-agent problem is a conflict in priorities between a person (or the principal) and the representative (or the agent) authorized to act on the principal's behalf. In this scenario, I was the principle, and Jiffy Lube, or specifically the car mechanic, was the agent. Jiffy Lube has an incentive to act in their personal interest to charge me as much money as they can, an interest that does not align with mine of solely wanting to get my oil changed. One way to correct my principle-agent problem was to secure alternatives. When I need an oil change, I now go to either the Ford dealership or a less-known mechanic. And in fact, now that I am 22 and actually do know everything, I can play their prices off of one another and get the least costly service!
1 comment:
I really enjoyed this post because I have also had experiences with Jiffy Lube that have me me hate it. I have also had scenerios involving Jiffy Lube that demonstrate the principal-agent problem. Once in high school, my mom asked if I could get the oil changed in her car because I used it a lot. Thankfully, she said she would pay for it if it did the errand. She gave me her card and a coupon to Jiffy Lube. When I arrived they informed me that the location does not accept coupons. I still elected to get the oil changed there even though it may have been cheaper to get the oil changed somewhere else without the coupon. This exhibited the principal-agent problem because my interest in getting the oil changed in as little time as possible did not align with my mother's interest in spending less money on an oil change.
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