I put the scores of the final and your course grade in Moodle. I will post the grades in Banner later today.
One point on the economics. You cannot be captured by your boss. You can be captured by the client. Likewise, Congress can't be captured by the American people. It can be captured by special interests. I perhaps didn't explain that well so I didn't punish anyone in the grading for saying that. If you ever discuss these ideas outside our class, I hope you do so properly.
Happy Holidays to each of you.
Thursday, December 20, 2012
Tuesday, December 11, 2012
Some Reading For After the Course Concludes
Here is a brief annotated list of things you might look at. Only the last one is specifically economics.
1. Finish reading B&D. It is a good and interesting book. The second half is on leadership, which we didn't mention at all. Perhaps we should have spent more time on other parts of the book than Chapter 8. Particularly, the parts on politics and on the symbolic frame are interesting and perhaps things outside your current experience.
2. Schon The Reflective Practitioner - I think of teaching as reflective practice. Nobody mentioned this in their comments but the blogging could very well have been about things after we covered them in class. Your learning should be reflective practice too. Sometimes this is called metacognition.
3. NAS How People Learn - The first few chapters are very useful, particularly the one on the expert-novice distinction and the next one on transfer.
4. Ericsson et. al. The Role of Deliberate Practice - The issue of why some people plateau while others keep on learning has to do with deliberate practice, which means on an ongoing basis trying things that are a little bit out of reach but not totally impossible. It takes a lot of determination to do that or it takes turning the activity into something fun so you persist at it.
5. Herbert Simon's Nobel Lecture - While this essay was mentioned in the Syllabus at the outset, we didn't spend any time on it. Now you may be ready to appreciate the ideas that are in it.
6. Alchian and Demzetz on Economic Organization - This is the definitive piece on the firm as arising from team production and the need for a "residual claimant" to address the monitoring and incentive issues. This is a scholarly paper published in the American Economic Review, one of the very top journals. But there is no math. You might find the writing style a bit hard at first because they are writing for academics, not a general audience.
1. Finish reading B&D. It is a good and interesting book. The second half is on leadership, which we didn't mention at all. Perhaps we should have spent more time on other parts of the book than Chapter 8. Particularly, the parts on politics and on the symbolic frame are interesting and perhaps things outside your current experience.
2. Schon The Reflective Practitioner - I think of teaching as reflective practice. Nobody mentioned this in their comments but the blogging could very well have been about things after we covered them in class. Your learning should be reflective practice too. Sometimes this is called metacognition.
3. NAS How People Learn - The first few chapters are very useful, particularly the one on the expert-novice distinction and the next one on transfer.
4. Ericsson et. al. The Role of Deliberate Practice - The issue of why some people plateau while others keep on learning has to do with deliberate practice, which means on an ongoing basis trying things that are a little bit out of reach but not totally impossible. It takes a lot of determination to do that or it takes turning the activity into something fun so you persist at it.
5. Herbert Simon's Nobel Lecture - While this essay was mentioned in the Syllabus at the outset, we didn't spend any time on it. Now you may be ready to appreciate the ideas that are in it.
6. Alchian and Demzetz on Economic Organization - This is the definitive piece on the firm as arising from team production and the need for a "residual claimant" to address the monitoring and incentive issues. This is a scholarly paper published in the American Economic Review, one of the very top journals. But there is no math. You might find the writing style a bit hard at first because they are writing for academics, not a general audience.
Blog Post Grades And Comments Uploaded
You should now be able to see grades for Blog Posts 2 as well as comments on those. In the process of trying to import those grades from my computer to Moodle, I discovered that the comments didn't import well at all. So I did those manually. I have also redone the comments for Blog Posts 1, since those too didn't import well. I'm very sorry about that. I'm sure it would have been useful to you to get the full comments earlier. I didn't realize the problem until this afternoon.
Sunday, December 9, 2012
Candidate Essay Questions For Final
There will be six candidate questions below and three will be chosen from the six. Two are new to you. You haven't seen them before and are on the last portion of the course. The other four you have seen. These are the unassigned candidate questions from Midterm 1 and Midterm 2.
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The New Questions:
A. This concerns turnover, quite possibly efficient, in the setting of the repeated Prisoner's Dilemma. One example can be seen in major college sports where the players have 4 years of eligibility. They can play at most 4 years after which new players take their place. For the very best players, who have the potential to play professionally, they may face a choice of foregoing a year or two of their college eligibility and turning pro early. Consider this from the perspective of the coach. Having such an excellent player on the roster increases the likelihood that the coach's team will win its games. Discuss the incentives for the coach in advising the player to turn pro or not and in utilizing the player to showcase his skills in game situations to pro scouts. Does the coach try to retain the player in making these decisions? Why or why not?
Now consider a similar situation of how upper level management considers the professional development of rising middle management. It is not unusual for middle management members to attend formal education aimed at executives, such as an Executive MBA program. We think of such formal education as providing "general human capital." Thus the education raises the productivity with the current employer but also increases the value of the employees outside option. What criteria will upper level management use for selecting candidates for such formal education? Will they be reluctant to send the very best middle managers to such programs for fear that they will lose these good personnel to other companies? Why or why not?
B. This question concerns innovative practice in the the setting of the repeated Prisoner's Dilemma. Employees with some responsibility allocated to them may be quite diligent in doing their established work, so shirking per se is not an issue at all, but they may be very reluctant to try out new approaches for fear of being blamed when an experiment along those lines blows up in their faces. There are various possible solutions to this issue:
(i) provide large rewards for experiments that succeed,
(ii) pool experiments across several employees each with some responsibility so responsibility is shared,
(iii) punish work groups if they don't show innovation over time.
(iv) possibly other mechanisms that might occur to you.
Discuss the pros and cons of each of these and discuss how the organization might come to a particular approach in trying to encourage organization members to be innovative.
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Candidate Questions from Midterm 1
C. This question concerns transfer prices. Provide a working definition for what a transfer price is. In a for-profit organization how should ownership (shareholders) want the transfer price to be set? Explain why others in the organization might want the transfer price to be set differently. What transfer price would these others like to see? When service quality is jointly set with the transfer price, what service quality would ownership like to see? Explain why this is the case. Others may want a different service quality level. Explain how their preferred service quality level differs from what ownership wants.
D. This question concerns economic efficiency concepts. There is a partial equilibrium concept and a general equilibrium concept. Describe each of these. Do the two concepts always coincide? If not, under what additional assumptions do they coincide. Provide an argument for why we should expect efficient outcomes. Economic efficiency has been critiqued on several grounds. Explain some of these criticisms and provide settings where the particular critique appears valid.
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Candidate Questions from Midterm 2
E. This question concerns procurement. Discus why in government agencies procurement is subject to regulation. What is the regulation aimed at preventing? What does it try to accomplish? Explain why during the bidding process the lowest price bidder may not be selected, although the process is competitive. Discuss the various goals the agency conducting the procurement may have going into the process.
F. This question concerns an agent who while performing the same function serves two different principals. What are some examples where this situation emerges? What problems are created that don't exist in the case where there is a single principal? Explain what "capture" means and how it arises in this context. What might be done to discourage capture?
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The New Questions:
A. This concerns turnover, quite possibly efficient, in the setting of the repeated Prisoner's Dilemma. One example can be seen in major college sports where the players have 4 years of eligibility. They can play at most 4 years after which new players take their place. For the very best players, who have the potential to play professionally, they may face a choice of foregoing a year or two of their college eligibility and turning pro early. Consider this from the perspective of the coach. Having such an excellent player on the roster increases the likelihood that the coach's team will win its games. Discuss the incentives for the coach in advising the player to turn pro or not and in utilizing the player to showcase his skills in game situations to pro scouts. Does the coach try to retain the player in making these decisions? Why or why not?
Now consider a similar situation of how upper level management considers the professional development of rising middle management. It is not unusual for middle management members to attend formal education aimed at executives, such as an Executive MBA program. We think of such formal education as providing "general human capital." Thus the education raises the productivity with the current employer but also increases the value of the employees outside option. What criteria will upper level management use for selecting candidates for such formal education? Will they be reluctant to send the very best middle managers to such programs for fear that they will lose these good personnel to other companies? Why or why not?
B. This question concerns innovative practice in the the setting of the repeated Prisoner's Dilemma. Employees with some responsibility allocated to them may be quite diligent in doing their established work, so shirking per se is not an issue at all, but they may be very reluctant to try out new approaches for fear of being blamed when an experiment along those lines blows up in their faces. There are various possible solutions to this issue:
(i) provide large rewards for experiments that succeed,
(ii) pool experiments across several employees each with some responsibility so responsibility is shared,
(iii) punish work groups if they don't show innovation over time.
(iv) possibly other mechanisms that might occur to you.
Discuss the pros and cons of each of these and discuss how the organization might come to a particular approach in trying to encourage organization members to be innovative.
------
Candidate Questions from Midterm 1
C. This question concerns transfer prices. Provide a working definition for what a transfer price is. In a for-profit organization how should ownership (shareholders) want the transfer price to be set? Explain why others in the organization might want the transfer price to be set differently. What transfer price would these others like to see? When service quality is jointly set with the transfer price, what service quality would ownership like to see? Explain why this is the case. Others may want a different service quality level. Explain how their preferred service quality level differs from what ownership wants.
D. This question concerns economic efficiency concepts. There is a partial equilibrium concept and a general equilibrium concept. Describe each of these. Do the two concepts always coincide? If not, under what additional assumptions do they coincide. Provide an argument for why we should expect efficient outcomes. Economic efficiency has been critiqued on several grounds. Explain some of these criticisms and provide settings where the particular critique appears valid.
---------
Candidate Questions from Midterm 2
E. This question concerns procurement. Discus why in government agencies procurement is subject to regulation. What is the regulation aimed at preventing? What does it try to accomplish? Explain why during the bidding process the lowest price bidder may not be selected, although the process is competitive. Discuss the various goals the agency conducting the procurement may have going into the process.
F. This question concerns an agent who while performing the same function serves two different principals. What are some examples where this situation emerges? What problems are created that don't exist in the case where there is a single principal? Explain what "capture" means and how it arises in this context. What might be done to discourage capture?
Monday, December 3, 2012
About the Final Exam
I mentioned in class today that the final will be a different format than the midterms. It will be an all essay test. There will be no math-like problems as on the midterms. The essay questions may cover topics we have math modeled, but they will ask for a discussion of the issues, not derivation of a bunch of equations.
As has been the practice, I will make the candidate questions known ahead of time. There will be between six and eight candidate questions. Three will be chosen. You can count on one of those being on content covering the reputations and dynamic incentives, since you haven't been tested on that yet. The other questions can come from material done earlier in the semester.
The Final is worth 300 points, yet I'm only having three essay questions, not six of them. This is so I can grade the thing in a reasonable time frame. So each essay will be worth 100 points. This doesn't mean you have to write twice as much as you wrote on the midterms. It does mean I will be a little sterner grading the essays on the final. For those who did attend class today, it means you have to light the match with your essay, not simply pour the gasoline.
As has been the practice, I will make the candidate questions known ahead of time. There will be between six and eight candidate questions. Three will be chosen. You can count on one of those being on content covering the reputations and dynamic incentives, since you haven't been tested on that yet. The other questions can come from material done earlier in the semester.
The Final is worth 300 points, yet I'm only having three essay questions, not six of them. This is so I can grade the thing in a reasonable time frame. So each essay will be worth 100 points. This doesn't mean you have to write twice as much as you wrote on the midterms. It does mean I will be a little sterner grading the essays on the final. For those who did attend class today, it means you have to light the match with your essay, not simply pour the gasoline.
For this Wednesday's class
We will begin talking about Prisoner's Dilemma - the repeated version. I've written up some notes on that. I would be good for you to read those through before class. Then depending on how much time is left we'll start talking about Efficiency Wages a la Shapiro and Stiglitz. I will make reference to the acutal paper, Equilibrium Unemployment as a Worker Discipline Device, instead of using M&R's discussion of the paper. (Note to access the actual paper from off campus you need to use the Campus VPN.) I have written up some notes on that paper too, in an attempt to cast it in a similar framework to the Prisoner's dilemma stuff and my prior essay on the economics of time.
I want to also clarify a point I made in class today about earning an economic rent in teaching the course. In a typical market the marginal seller earns no economic rent and just receives his or her opportunity cost. Sellers with lower opportunity cost are termed inframarginal sellers. They earn rents. So in normal market it is not that there are no economic rents. It is only that the marginal seller doesn't get any.
In the Shapiro and Stiglitz paper, all the workers are identical except that some are employed and others are unemployed. The employed workers do strictly better than the unemployed ones. So the employment workers get an economic rent and the unemployed workers are "involuntarily" unemployed. That is not how we think normal markets work, but it is why unemployment can serve as a discipline device.
I want to also clarify a point I made in class today about earning an economic rent in teaching the course. In a typical market the marginal seller earns no economic rent and just receives his or her opportunity cost. Sellers with lower opportunity cost are termed inframarginal sellers. They earn rents. So in normal market it is not that there are no economic rents. It is only that the marginal seller doesn't get any.
In the Shapiro and Stiglitz paper, all the workers are identical except that some are employed and others are unemployed. The employed workers do strictly better than the unemployed ones. So the employment workers get an economic rent and the unemployed workers are "involuntarily" unemployed. That is not how we think normal markets work, but it is why unemployment can serve as a discipline device.
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