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.
Showing posts with label 01. Announcements. Show all posts
Showing posts with label 01. Announcements. Show all posts
Thursday, December 20, 2012
Tuesday, December 11, 2012
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.
Sunday, November 25, 2012
Upcoming Class Activities Sidebar Items Broken
The gadget for Blogger that I use for the upcoming class activities seems to be broken and Google recommends removing it from the blog. So I did that. You will instead have to go to the Class Calendar Tab to see the upcoming items. I am sorry for the inconvenience.
Prof. Arvan
Prof. Arvan
Sunday, November 11, 2012
Next two class sessions
Tomorrow we will start talking about moral hazard, the principal-agent problem as exemplar of moral hazard, and do so to get concepts out there and real examples considered. I plan to avoid using a PowerPoint in this session so we can get more interaction in class.
On Wednesday we'll do the math of the principal-agent problem in chapter six in M&R, introducing that with the insurance model, and moving from there. We'll also do the S&L example from the book and talk about bank moral hazard in the presence of deposit insurance. (The same sort of moral hazard may be present in a takeover financed by "junk bonds.") We'll also do a brief discussion of the S&L crisis of the late 1980s and ask the question - why did history repeat only much worse in the financial markets in the 2000s.
I will use a PowerPoint for the Wednesday class so you can see the equations and work through the algebra. I will not be giving out an Excel homework - it simply takes too long to write so there is some expediency in this approach.
I will guarantee now that something on Moral Hazard will be present on Midterm 2, so I hope you take this seriously in spite of the lack of Excel homework.
On Wednesday we'll do the math of the principal-agent problem in chapter six in M&R, introducing that with the insurance model, and moving from there. We'll also do the S&L example from the book and talk about bank moral hazard in the presence of deposit insurance. (The same sort of moral hazard may be present in a takeover financed by "junk bonds.") We'll also do a brief discussion of the S&L crisis of the late 1980s and ask the question - why did history repeat only much worse in the financial markets in the 2000s.
I will use a PowerPoint for the Wednesday class so you can see the equations and work through the algebra. I will not be giving out an Excel homework - it simply takes too long to write so there is some expediency in this approach.
I will guarantee now that something on Moral Hazard will be present on Midterm 2, so I hope you take this seriously in spite of the lack of Excel homework.
Monday, November 5, 2012
Bargaining Homework
The Excel homework on Bargaining is now available. The one short cut I took in making this is that the graphs are just there. They are not dynamically generated as you answer the questions, as in the previous homeworks. I thought it more important to get the thing up than to have this bit of slickness.
As you can tell from this post I am home and very happy to be here. I will see you in class on Wednesday. Please get the homework done before then.
As you can tell from this post I am home and very happy to be here. I will see you in class on Wednesday. Please get the homework done before then.
Sunday, November 4, 2012
No class tomorrow (Monday). Class on Wednesday.
I am going home tomorrow, though I am not sure when. So I am canceling class for that reason. There will be class on Wednesday. The topic will be bargaining and procurement. If time permits we'll also begin our discussion of moral hazard from an informal/intuitive vantage. Though this is not a course document, I encourage you to read today this post, The Diffeq from Hell, http://lanny-on-learn-tech.blogspot.com/2012/10/the-diffeq-from-hell.html?m=1, which is about the making of the Excel homework on Bargaining. I will commit here to have that homework up and available by tomorrow evening. I hope that you can get it done before class on Wednesday. I realize that is a short turnover. But under the circumstances, that is what makes sense so we can get back on track.
The procedure I had today went well and my prognosis is good. They got to this thing early enough that I believe things will be under control from here on out. It was quite a scare last week but now it is time for optimism.
My attire in class likely will change as a consequence --- casual casual instead of business casual. I'll explain why on Wednesday. Maybe some of you will respond by dressing up so the mean attire level in the room remains unaltered. ;-) And if there is candy left over I'll bring it then.
Prof. Arvan
The procedure I had today went well and my prognosis is good. They got to this thing early enough that I believe things will be under control from here on out. It was quite a scare last week but now it is time for optimism.
My attire in class likely will change as a consequence --- casual casual instead of business casual. I'll explain why on Wednesday. Maybe some of you will respond by dressing up so the mean attire level in the room remains unaltered. ;-) And if there is candy left over I'll bring it then.
Prof. Arvan
Wednesday, October 24, 2012
Turning a molehill into a mountain
The survey results can be seen in Moodle. I thought some of the comments were interesting. We'll
I again would like to apologize for missing class today. My present plan on how to manage that is simply to move everything back one class session, so our discussion on signaling will be on Monday, your Blog post about B&D chapter 8 can be turned in as late as Monday night. I'll read those on Tuesday and we can discuss on Wednesday. I will get the calendar adjusted to reflect these changes ---- in a little while.
So now the story of this little fiasco, which might prove interesting when we consider employee shirking, which sometimes happens in the form of absenteeism. Now you'll have the chance to tell your friends and family, "hey, my instructor cancelled class one day by giving the lame excuse that he had to go to the emergency room."
The medical issue, truly minor, is that one of the stitches didn't get absorbed properly so the wound opened and started oozing. I was home alone and it was getting a bit messy so I called my wife to see if she could help by calling the orthopedics folks at Carle and asking them what I should do. She calls back a few minutes later and says the nurse told her I should go to the ER. But when I finally saw the doc later today, he said the ER trip was unnecessary. He's on call and I could have met with him for a regular office visit. The nurse had panicked by recommending the ER. One good turn deserves another, so my wife panicked too. As a consequence I did go to the ER. The physician's assistant saw me in the waiting room so I wouldn't have an ER bill. He patched me up temporarily. I saw the doc later, and I'm seeing him tomorrow again just to make sure. But the whole thing is much ado about nothing other than you guys missing class.
They say - better safe than sorry. In this particular case I'm safe and also very sorry to have cancelled.
I again would like to apologize for missing class today. My present plan on how to manage that is simply to move everything back one class session, so our discussion on signaling will be on Monday, your Blog post about B&D chapter 8 can be turned in as late as Monday night. I'll read those on Tuesday and we can discuss on Wednesday. I will get the calendar adjusted to reflect these changes ---- in a little while.
So now the story of this little fiasco, which might prove interesting when we consider employee shirking, which sometimes happens in the form of absenteeism. Now you'll have the chance to tell your friends and family, "hey, my instructor cancelled class one day by giving the lame excuse that he had to go to the emergency room."
The medical issue, truly minor, is that one of the stitches didn't get absorbed properly so the wound opened and started oozing. I was home alone and it was getting a bit messy so I called my wife to see if she could help by calling the orthopedics folks at Carle and asking them what I should do. She calls back a few minutes later and says the nurse told her I should go to the ER. But when I finally saw the doc later today, he said the ER trip was unnecessary. He's on call and I could have met with him for a regular office visit. The nurse had panicked by recommending the ER. One good turn deserves another, so my wife panicked too. As a consequence I did go to the ER. The physician's assistant saw me in the waiting room so I wouldn't have an ER bill. He patched me up temporarily. I saw the doc later, and I'm seeing him tomorrow again just to make sure. But the whole thing is much ado about nothing other than you guys missing class.
They say - better safe than sorry. In this particular case I'm safe and also very sorry to have cancelled.
Monday, October 22, 2012
Survey on Course Directions
Please take a few minutes to complete this survey. I got a bit carried away in writing it so it is too wide to embed into the blog, which is why it is linked here instead.
The goal is to use the responses from the survey in our class discussion on Wednesday and then come up with whatever changes we will make in that session. I will aggregate the results Wednesday morning - probably around 9 AM. If you complete the survey before then, your views will be included in the aggregate results.
The goal is to use the responses from the survey in our class discussion on Wednesday and then come up with whatever changes we will make in that session. I will aggregate the results Wednesday morning - probably around 9 AM. If you complete the survey before then, your views will be included in the aggregate results.
Saturday, October 13, 2012
Getting Caught Up - Grades, Blog Posts, and Baseball
I have now enabled Moodle and put some data there that you might want to verify. First, on the left you should see a link to Grades. Click that. There should be 4 entries. The first is your alias. The other three are homework scores. Each submission is worth 10 points. You should also see a file near the top called Blog Participation Matrix. There should be an x for each post you have done.
If you believe there is a discrepancy, please let me know as soon as possible, so we can fix the problem.
When the midterm has been graded the scores will be entered into the Grades area in Moodle. After the sixth blog post I will also do grades and comments for those. Soon after, I'd like to meet with you to discuss your blogging and what you might do to improve things. Those meetings will occur outside regular class time and will need to be scheduled.
Monday is our review session. To makes that session worthwhile, you should come ready with your questions/issues. Of course, the midterm is Wednesday. It's written and photo copied. You really shouldn't need a calculator to do it, but you can bring one if it makes you feel more comfortable to do so. There is a blog post due this Thursday. The prompt for it has been posted, so if you'd like yo you can get it done early.
Finally I'm grateful that the Yankees made it to the next round and especially that yesterday's game started at 4 PM. I fell asleep in the middle of the game on Thursday. I hope I can make it through the ninth inning this evening.
If you believe there is a discrepancy, please let me know as soon as possible, so we can fix the problem.
When the midterm has been graded the scores will be entered into the Grades area in Moodle. After the sixth blog post I will also do grades and comments for those. Soon after, I'd like to meet with you to discuss your blogging and what you might do to improve things. Those meetings will occur outside regular class time and will need to be scheduled.
Monday is our review session. To makes that session worthwhile, you should come ready with your questions/issues. Of course, the midterm is Wednesday. It's written and photo copied. You really shouldn't need a calculator to do it, but you can bring one if it makes you feel more comfortable to do so. There is a blog post due this Thursday. The prompt for it has been posted, so if you'd like yo you can get it done early.
Finally I'm grateful that the Yankees made it to the next round and especially that yesterday's game started at 4 PM. I fell asleep in the middle of the game on Thursday. I hope I can make it through the ninth inning this evening.
Wednesday, October 10, 2012
Candidate essay questions for midterm 1
One of three questions below will be the essay question on the midterm. Of course you should prepare for the exam as you see fit, but I encourage you to work through an answer to each question so you are ready for the test.
By the way, the exam is closed book, closed notes. The only materials you're allowed are pen and pencil and a calculator.
A. This question concerns transaction costs. The underlying cause for the transaction costs are specific inputs so that finding alternative suppliers is difficult if not impossible. The input supplier then has the power to "hold up" the organization. There are multiple potential ways to manage transaction costs. Here we'll consider three:
(i) monitoring performance coupled with the appropriate carrots or sticks,
(ii) extrinsic reward for excellent performance via bonuses, and
(iii) intrinsic reward by giving the input supplier some control over organization goals and strategies to implement those goals.
Discuss the upside and the downside with each particular method. Provide an example of a circumstance where that method is the preferred one,
B. 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.
C. 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.
By the way, the exam is closed book, closed notes. The only materials you're allowed are pen and pencil and a calculator.
A. This question concerns transaction costs. The underlying cause for the transaction costs are specific inputs so that finding alternative suppliers is difficult if not impossible. The input supplier then has the power to "hold up" the organization. There are multiple potential ways to manage transaction costs. Here we'll consider three:
(i) monitoring performance coupled with the appropriate carrots or sticks,
(ii) extrinsic reward for excellent performance via bonuses, and
(iii) intrinsic reward by giving the input supplier some control over organization goals and strategies to implement those goals.
Discuss the upside and the downside with each particular method. Provide an example of a circumstance where that method is the preferred one,
B. 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.
C. 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.
Thursday, September 27, 2012
Road Map for Next Three Weeks
This morning I put in calendar entries for all sessions through the first midterm. Here I want to give a narrative to explain that and give you a heads up so you can best prepare outside of class.
We are talking about six class sessions where the sixth is the exam. You'll have the full 80 minutes for the test. I will write it with the aim that it takes half that time. That day you should spread out around the room. The exam format will be 2 problems/scenarios (each spreadsheet within a workbook corresponds to a possible scenario. There will also be one essay question. I will distribute 3 to 5 potential questions ahead of time. The actual question will be selected from one of those.
The Monday before the exam we'll have a review session so you can feel prepared for the test. I will do no new content then. There won't be a blog post due the prior Thurs., to free up in class-time for the review. Students will drive that session via the questions they ask.
That leaves four other sessions and we will go through those last to first. On Wed. October 10, we will discuss information economics as it pertains in insurance markets and in that context consider adverse selection (hidden information) and moral hazard (hidden action). This session will be based on an Excel homework that I'm committed to author and have ready by next Tuesday (10/2). The content in this homework is fair game for the midterm.
On Mon. October 8, we will recycle back to transfer prices. This session will be partly a discussion about student posts on Illini bucks, partly a discussion about non-price means of allocation as an alternative to transfer prices, and partly a discussion about off-the-top funding for a division as an alternative to transfer pricing. We also want to review the Excel spreadsheet on transfer pricing from the homework.
On Wed. October 3, we will talk about the elements of risk and insurance. I hope for most of you this is a review from intermediate micro. My intent here is to spend a disproportionate amount of time on definitions of concepts. Our best session so far was when we spent our time this way. We'll also spend some time on a rudimentary model of insurance. This will be based on material available here.
Next Mon., October 1, we will continue the discussion about coordination in the presence of Knightian Uncertainty by talking about learning and decision making. We'll consider the economics model of experimental consumption (or equivalently how a monopolist chooses price to learn about the demand curve. Then we'll consider non-economic approaches: (1) Steve Sample on Thinking Gray (Read the first pages through page 12.) (2) Malcolm Gladwell's Blink on Thin Slicing (Read the first pages through page 25.) (3) Daniel Kahneman on WYSIATI from Thinking Fast and Slow.
We are talking about six class sessions where the sixth is the exam. You'll have the full 80 minutes for the test. I will write it with the aim that it takes half that time. That day you should spread out around the room. The exam format will be 2 problems/scenarios (each spreadsheet within a workbook corresponds to a possible scenario. There will also be one essay question. I will distribute 3 to 5 potential questions ahead of time. The actual question will be selected from one of those.
The Monday before the exam we'll have a review session so you can feel prepared for the test. I will do no new content then. There won't be a blog post due the prior Thurs., to free up in class-time for the review. Students will drive that session via the questions they ask.
That leaves four other sessions and we will go through those last to first. On Wed. October 10, we will discuss information economics as it pertains in insurance markets and in that context consider adverse selection (hidden information) and moral hazard (hidden action). This session will be based on an Excel homework that I'm committed to author and have ready by next Tuesday (10/2). The content in this homework is fair game for the midterm.
On Mon. October 8, we will recycle back to transfer prices. This session will be partly a discussion about student posts on Illini bucks, partly a discussion about non-price means of allocation as an alternative to transfer prices, and partly a discussion about off-the-top funding for a division as an alternative to transfer pricing. We also want to review the Excel spreadsheet on transfer pricing from the homework.
On Wed. October 3, we will talk about the elements of risk and insurance. I hope for most of you this is a review from intermediate micro. My intent here is to spend a disproportionate amount of time on definitions of concepts. Our best session so far was when we spent our time this way. We'll also spend some time on a rudimentary model of insurance. This will be based on material available here.
Next Mon., October 1, we will continue the discussion about coordination in the presence of Knightian Uncertainty by talking about learning and decision making. We'll consider the economics model of experimental consumption (or equivalently how a monopolist chooses price to learn about the demand curve. Then we'll consider non-economic approaches: (1) Steve Sample on Thinking Gray (Read the first pages through page 12.) (2) Malcolm Gladwell's Blink on Thin Slicing (Read the first pages through page 25.) (3) Daniel Kahneman on WYSIATI from Thinking Fast and Slow.
Tuesday, September 25, 2012
Monday, September 24, 2012
Here is where we seem to be
1. I would like to hold class on Wednesday, but I don't yet have a ride. So check this space tomorrow evening or Wednesday morning to confirm.
2. I am on pain relievers. But I am entirely logical in my thinking. The issue for me (assuming the class is held) will be fatigue, not lala land.
3. I may dress more casually to accommodate the immobilizer. Please don't let that bother you.
4. Everything I produce on the computer now is done with the left hand. (I am right handed.) That is slow. So I am trying to figure out what to do with the Excel homework near term. We should discuss this in class on Wed. Perhaps we'll concentrate more on B&D for a couple of days to balance things off.
5. There have been a couple of comments to earlier posts. Thanks for that. I like getting the comments. Please keep them coming.
2. I am on pain relievers. But I am entirely logical in my thinking. The issue for me (assuming the class is held) will be fatigue, not lala land.
3. I may dress more casually to accommodate the immobilizer. Please don't let that bother you.
4. Everything I produce on the computer now is done with the left hand. (I am right handed.) That is slow. So I am trying to figure out what to do with the Excel homework near term. We should discuss this in class on Wed. Perhaps we'll concentrate more on B&D for a couple of days to balance things off.
5. There have been a couple of comments to earlier posts. Thanks for that. I like getting the comments. Please keep them coming.
Thursday, September 13, 2012
Upcoming Schedule
Below is the change of schedule I mentioned in the previous post along with some annotations about how you might best take advantage of it.
Blog Posts
Tonight there is a blog post due. It is the first real one after last week's posting about your alias. This one asks about your experiences in organizations. I would like to spend some time on Monday, probably at the beginning of class discussing points culled from your posts.
There is no blog post due next week. Partly that is simply because I will be unable to comment on the posts immediately after my procedure. It is also partly to get the pace of the class better in tune.
The next blog post is due in two weeks. The topic - refraining from behaving opportunistically - is important. My preference is that you use an example other than not cheating while taking an exam. I'm sure some of you don't cheat but are aware or believe that others do. (And some of you might have cheated in the recent past, but writing about that would be weird.) We might discuss this example in class. But if it is the only example we discuss than it will be less interesting. It would be much better to consider the issue in a variety of contexts.
I am cancelling class Monday the 24th, which is just a few days after my procedure. That should give you more time to consider the blog post you will write and to help put together the various pieces that the class is considering.
Excel Homework
The next Excel Homework is due a week from today, on Coordination Failures and Coordinating Mechanisms. We'll do a little bit next Wednesday on the Intern Matching program which is the concern of the second worksheet, but the first worksheet (which is simple but important) and the third worksheet on transfer pricing, we don't get to in class for a while. I want you to do it early so you begin to get some perspective on the issues.
The third worksheet in that homework is about Transfer Pricing. This is discussed in Milgrom and Roberts, but my tone and perspective is different than theirs. Because they take the Efficiency Principle as truth, their analysis proceeds in a certain way. But what happens if instead of bargaining, the parties act independently? What then? Might it be the case where parties create private benefit but inefficient group outcomes as a consequence? This alternative possibility is more consistent with Bolman and Deal's political frame. In essence, politics is the consequence of social inefficiency.
Upcoming Class Sessions
Next Monday in class when we conclude the discussion on efficiency that was started yesterday, I want to discuss via examples the issue of gaming the system or designing it. I hope by doing that to make these ideas about Social Surplus and Pareto Optimality more real to you.
On Wednesday we'll discuss "the assignment problem" and discuss that from a couple of different perspectives. One job of management is to solve the assignment problem. If you've seen the movie, Eight Men Out, this scene might help in considering some of the issues (the first one at the link):
http://www.quotefully.com/movie/Eight+Men+Out/Charles+Comiskey
As I said above, I'm cancelling class the following Monday. I'm also going to leave the mixture of doing modeling versus simply having discussion unspecified for now. The reality of my procedure suggests that these things will fall out based on how I'm doing afterward.
Blog Posts
Tonight there is a blog post due. It is the first real one after last week's posting about your alias. This one asks about your experiences in organizations. I would like to spend some time on Monday, probably at the beginning of class discussing points culled from your posts.
There is no blog post due next week. Partly that is simply because I will be unable to comment on the posts immediately after my procedure. It is also partly to get the pace of the class better in tune.
The next blog post is due in two weeks. The topic - refraining from behaving opportunistically - is important. My preference is that you use an example other than not cheating while taking an exam. I'm sure some of you don't cheat but are aware or believe that others do. (And some of you might have cheated in the recent past, but writing about that would be weird.) We might discuss this example in class. But if it is the only example we discuss than it will be less interesting. It would be much better to consider the issue in a variety of contexts.
I am cancelling class Monday the 24th, which is just a few days after my procedure. That should give you more time to consider the blog post you will write and to help put together the various pieces that the class is considering.
Excel Homework
The next Excel Homework is due a week from today, on Coordination Failures and Coordinating Mechanisms. We'll do a little bit next Wednesday on the Intern Matching program which is the concern of the second worksheet, but the first worksheet (which is simple but important) and the third worksheet on transfer pricing, we don't get to in class for a while. I want you to do it early so you begin to get some perspective on the issues.
The third worksheet in that homework is about Transfer Pricing. This is discussed in Milgrom and Roberts, but my tone and perspective is different than theirs. Because they take the Efficiency Principle as truth, their analysis proceeds in a certain way. But what happens if instead of bargaining, the parties act independently? What then? Might it be the case where parties create private benefit but inefficient group outcomes as a consequence? This alternative possibility is more consistent with Bolman and Deal's political frame. In essence, politics is the consequence of social inefficiency.
Upcoming Class Sessions
Next Monday in class when we conclude the discussion on efficiency that was started yesterday, I want to discuss via examples the issue of gaming the system or designing it. I hope by doing that to make these ideas about Social Surplus and Pareto Optimality more real to you.
On Wednesday we'll discuss "the assignment problem" and discuss that from a couple of different perspectives. One job of management is to solve the assignment problem. If you've seen the movie, Eight Men Out, this scene might help in considering some of the issues (the first one at the link):
http://www.quotefully.com/movie/Eight+Men+Out/Charles+Comiskey
As I said above, I'm cancelling class the following Monday. I'm also going to leave the mixture of doing modeling versus simply having discussion unspecified for now. The reality of my procedure suggests that these things will fall out based on how I'm doing afterward.
Wednesday, September 12, 2012
Work Around for Homework Download/Extending First Homework Deadline
I have looked for other alternatives of where to store the Excel Homework for members of the class to access. For the Efficiency Concepts Workbook, I now have posted a copy to SCRIBD and also posted a copy to the U of I's new Box service. For those of you who have yet to do the assignment, see if you can download one of those and then see if you can submit your solution by this evening. You'll still get credit for doing it that way.
Longer term. I will choose one of those as the alternative place to post the assignment and continue to use Google docs as well. I'd like to choose the Campus Box service, but I was having problems with the login this morning. I'd want to make sure those are behind me before opting for it. SCRIBD should work, though it is not a campus service, but at least there is a fallback option.
The only real downside to using one of these is that while I can paste the link to the site of the document in the Google Calendar description, that won't be clickable. You'd have to copy it from the calendar description and paste into your browser. I can put in a clickable link in the block post about the assignment, but not in the calendar description.
Longer term. I will choose one of those as the alternative place to post the assignment and continue to use Google docs as well. I'd like to choose the Campus Box service, but I was having problems with the login this morning. I'd want to make sure those are behind me before opting for it. SCRIBD should work, though it is not a campus service, but at least there is a fallback option.
The only real downside to using one of these is that while I can paste the link to the site of the document in the Google Calendar description, that won't be clickable. You'd have to copy it from the calendar description and paste into your browser. I can put in a clickable link in the block post about the assignment, but not in the calendar description.
Tuesday, September 4, 2012
Some Reminders
Tomorrow we'll begin with a technology demo. It would be good if you could bring your laptop to class. It would also be good if you could download the Excel file we'll use for the demo ahead of time. That Excel file is here. After following the link, go to the file menu and select download.
A few of you have sent me the link to your blog, but many have not yet done that. Please do so at your earliest convenience. Note that the first real post, a description of the economist from whom your alias has been derived, is due this Thursday at 11 PM.
A few of you have sent me the link to your blog, but many have not yet done that. Please do so at your earliest convenience. Note that the first real post, a description of the economist from whom your alias has been derived, is due this Thursday at 11 PM.
Monday, August 20, 2012
Under Construction
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