How Not To Promote Gift Exchange In The Classroom

Adam Grant is a psychologist and a professor at Wharton, the famous business school at the University of Pennsylvania.  He occasionally writes pieces for the NY Times that are about acts of kindness which promote productivity.  You will like find this one quite interesting and relevant to our class.

Why We Should Stop Grading Students on a Curve - The New York Times via kwout

More on Teams

If you were in class today you were assigned to a team of 2 or 3 students.  I had planned on noting who was on what team.  If you can please have one team member email me with the the full team membership and copy your teammates on the message.  Indeed on all messages about team matters that are sent to me, please copy your teammates.  You might think that people would know to do that.  But my experience is that many don't.

If you have not been assigned to a team yet, but you've already set up your blog, I will be assigning you to a team later today.  Because I failed to record whom I assigned to teams yesterday, I will wait to assign others to teams till I have the requisite information. 

If you haven't yet set up your blog, please do so asap and then I will assign you to a team.

Team members are commenting on the posts of other members on the team.

Excel Homework Due 9/14 at 11 PM

This is the homework on Efficiency and Equity Concepts.  It is crucial to understand this stuff as background on the Economics of Organizations.  M&R discuss the Efficiency Principle in Chapter 2.  It guides economic thinking about organizations.  You need to understand what is implied by that principle.

As always, if you have any questions on this assignment, please post them as a comment to this post.

Last year students expressed interest in having some background materials on these matters, either for viewing ahead of time before looking at this homework, or afterward, to see if you were making good sense of the assignment.  I last taught intermediate micro in spring 2011.  For that offering I did make a lot of content that you are welcome to peruse.  If you do access this stuff, I would be interested in learning whether you found it useful.

Partial Equilibrium Approach - Social Surplus

YouTube Videos
Social Surplus Basics
Allocating Surplus in the Presence of a Unit Tax
Allocating Surplus - Monopoly

Excel Workbook
Cost-Benefit Analysis.xlsx

General Equilibrium/Edgeworth Box Approach

YouTube Videos
Welcome and Deconstruction
Barter
Consumer A's Choice
Existence and Uniqueness of Competitive Equilibrium
Pareto Improvement
First and Second Welfare Theorems

Excel Workbook
Edgeworth Box.xlsx

Word Document
Notes on General Equilibrium.docx

Students Who Have Yet To Set Up Their Blogs - The Weakness of Gift Exchange

As of 8 AM this morning, 22 students have their blogs linked from the class site.  There are 9 students who don't.  I encourage all students to have their blogs set up and linked from the class site by our session Thursday, when I will be assigning students to teams that will endure for the remainder of the semester.

The gift exchange model that we discussed does include a punishment for non-performance....separation.  In reality, that is a very drastic punishment.  There is no discussion in the model of lesser punishments that might be suitable for more minor offenses.  At issue is whether that is a weakness to the approach or if such punishments should be necessarily ad hoc, because the focus is on gifting and collegiality, not on poor performance and punishment.

In this case what we'll do is this.  If students have their blogs linked by Thursday (having emailed me with the link and a post about your economist on your site) then they will be part of the ordinary team forming process.  If there are students who still don't have a blog at that point, those students will be put on the same team(s) and deal with the consequences of that.   This seems fair to me and a way for the slackers not to distract (too much) from the other students who are giving the course a go.

The Economics of the EpiPen

Since we talked about this in class a bit on Thursday, I thought students would find this post interesting.  The article argues there are possible solutions, but nothing really attractive.

My own view on this is that our intellectual property laws are now too skewed in favor of the patent (or copyright) holder.  One way to change things would be to shorten the term for which the intellectual property protection applies.  That solution is not suggested in the piece, but it is something to consider.  Presumably after the device is out of patent, there can be effective competition from generic alternatives.  At that point, it is the responsibility of the generic manufacturers to convince doctors that their product is as good as the original.  Maybe that's a tough sell, but that's what needs to happen.

The Lesson of EpiPens: Why Drug Prices Spike, Again and Again - The New York Times via kwout

A few comments based on the blogs people are submitting

It would be really good if everyone's blog has their famous economist appearing in the blog title.   Right now some people are submitting their blogs without that.  You can edit the title to get this done.  In your blog dashboard go to Settings.  In the Basic tab, your should see Blog Title and a link to Edit that.

Next, it would be good if your blog description had a disclaimer like - I am a student in Professor Arvan's Econ 490 class.  I am blogging under an alias to protect my true identity using the name of a famous economist for that purpose.

I doubt anyone reading this would think you really are the famous economist, but if somebody stumbles onto your site then they might make an inference about you that they shouldn't make.  So the disclaimer is there to prevent that.

Third, some of you are posting links to references, a good thing.  However, those links are not live like they would be in a Facebook status update.  You should see a Link tool in the Blogger editor.  It works by highlighting the text you want to link and then pasting the link into the dialog box in the appropriate place.  I hope that in the future you can use that linking tool.

Fourth, please give a title to each of your posts.  It is much easier to make a reference to the post if it has a title to go with it.

Finally, please use line spaces between paragraphs.  (And please use paragraphs rather than write one big block of text.)  It is much easier to read if there is a lot of white space to accompany the writing.  Further, since we're not printing these posts out, there is no need to conserve on the length of what you write.

I thank you in advance for adhering to these suggestions.  It will improve my life, for sure, and likely improve yours as well.

Some follow up to today's class session

Food Preference

It is interesting what one learns from asking for frivolous information.  I was surprised by how popular Chipotle was as a food preference, so I did a stock lookup for them.  Their price was much higher a year ago.  I wonder why.  In any event, if the popularity within the class is indicative of a broader based strong demand, perhaps there is an investment opportunity there for those of you who do that sort of thing.

Decisions for Tuesday

There are two issues pending for the class to decide by next Tuesday.  One is about the seating and along with it the mode in which we interact.  I did realize about an hour into the session today that if we stay with the horseshoe seating and keep to discussion mode that I need some crib sheet to remind me how to steer the conversation.   The other issue is about whether electronic devices should be put away or available during class.  If you'd like to indicate your preference to me electronically, you can email me that.  Otherwise I'll poll the class about it on Tuesday.

Student Blogs

Also note that you are supposed to be sending me the link to your blog in the next day or so and that you should have a post up about the economist who is the basis for your alias.

The Economics in Today's Discussion

Now I want to turn to the economics in our discussion today by considering two different things.  The first is to view Simon's research as providing a gateway for behavioral economics and to better understand the psychological underpinnings of decision making.  There has been much written on this by now, but I wonder how much students have been exposed to these ideas.  Here I will content myself with just one concept, which is kind of the obverse for search.  It is called WYSIATI (What you see is all there is).  The decision maker (mistakenly) assumes there is nothing to learn by gathering more information so goes with his gut.  Once in a while this is actually right because a real search would be unproductive.  But many times people decide too quickly and would be better off getting more information.  Such people need to be educated to be less impulsive in making a choice.  That's a long process.

The other thing is to reconsider the student moral hazard and use that as an example for our upcoming topic - transaction costs.  In this case, the issue is that while I am posting PowerPoint slides which have quite a bit of discussion in them in the notes area, that students could access before class so they are ready for the live class session, students don't seem to be doing that.  This became obvious today when I asked about whether students had heard the term satisficing.  (I've checked and there is no "y" in the spelling of that word.)  Most indicated it was new to them, but in fact it is mentioned and discussed in the PowerPoint for the session.

Further, Box.com provides me with access data.  Here is the information for the pptx file.  Note that the two downloads at 12:22 today were by me in the classroom, as I was giving a demo to a student who had just added the class, and I accidentally clicked the download button a second time.

And here is the analogous information for the pdf file.

In the future I will not look at this sort of information.  I've done it here only to confirm a general impression that most students in the class are not getting at this content that I'm providing.  

Taking that as a fact, there are probably three questions to ask as follow up.  First, does it matter?  Second, if it does matter what can be done to encourage greater actual access to the content in the future?  And third, why is it happening now?   

My conjecture on the third one is that students have become accustomed to using their classes (which are mainly lecture) as gateways to the subject matter.  They make their initial foray into the topic via the professor's discussion of it.  If that is right, then this is happening as a consequence of a previously formed habit, which most students in the class seem to possess.  

Let me offer up an alternative hypothesis for you to consider.  That would be that the answer to the first question is that it doesn't matter, so why put in needless effort.  I wonder if any students actually have thought it through enough to believe that, but it is clear that if that were the majority belief it would be largely self-enforcing.  If one or two students came prepared but everyone else did not, either the others wouldn't talk up much at all or most of the conversations would be conducted by those who weren't yet informed on the matter.  Either way, that would not encourage others to be informed in the future.  Encouragement would be more likely if the conversation seemed interesting so students wanted to be a part of it.

I do think that if most of the class were better prepared then it would matter, a lot.  It might take a while for the class to find its rhythm that way, but the conversations would be far richer because people would be ready for that.  Rich conversation in class is my own aspiration level. 

So, finally, let me talk about encouraging your preparation in the future.  And if you think about this some, you will begin to understand what really is at root in considering transaction costs.  This post is meant to alert you to the issue, so you can consider it on your own.  You do need to ask yourself, what is it that you want and why do you want it?  

Perhaps the answer to that is, you don't really know.  We mentioned in class the notion of experimental consumption.  You might consider experimenting with your preparation, as a way for you to learn about how the works for you.  Incidentally, if you do that, I'd expect you to have questions about what is in the PowerPoint.  Having those questions is part of what it means to get ready.  You might try to answer some of them yourself. And then you might compare that with how they get addressed in the class discussion.  That could be engaging for you and you would surely learn more that way.

In any event, thinking it through this way is my approach to providing encouragement.  Some of you might react that instead I should provide class participation credit for your performance in the course.  I can understand that thought, but I will not do that.  Here are two reasons why.  First, it is somewhat stressful to try to keep the flow of the discussion going.  To burden that further with noting student performance is just too much for me.  Second, as I've now said repeatedly, I want to work in a collegial environment where there is gift exchange.  You can then think of your preparation as a gift to the class.  I think that's the way it should be.  You benefit as part of the class because the overall level of discussion is higher.  But you don't get a private benefit because your own performance shines compared to others in the course.  This is not meant to be a competition.  It is meant to be a community.