We are three friends: Pandu, Chandu and Bandhu. One evening we decide to have a drink. We add a little complication to the usual routine of menu selection.
(Sorry guys, whoever you are!)
Pandu pays for the drink; Chandu chooses the particular drink but finally Bandhu consumes. How will the event roll out? Observe how the cause and consequences of the decision have been split among three parties: Payer (Pandu), Chooser (Chandu) and Beneficiary (Bandhu).
Witness this happening in so many events of our life. Take tax, for instance. I pay the money, the government chooses how it is spent, and the beneficiary is an entity completely different from either the payer or the chooser. How appropriate are the incentives for spending the money efficiently? Isn’t it unsurprising that most government spending is ill managed?
More on the Payer-Chooser-Beneficiary (PCB) matrix (courtesy a mid flight discussion with Parth)!
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The opinions expressed in this essay are those of the authors. They do not purport to reflect the opinions or views of CCS.
