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Economic Decision Making

Textbook Chapter: Chapter 1

MobLab Game: (Keynesian) Beauty Contestin bidding experience.

  • Gain first-hand experience with the winner’s curse.
  • Asymmetric Information

    Textbook Chapter: Chapter 14

    MobLab Game: Market for Lemonse market with identical firms, all firms earn zero economic profits.

    MobLab Survey: Mental Accounting: Sunk Costs

    Key Learning Objectives:

    • Surplus maximization requires ignoring sunk costs.
    • Easier said than done!

    Perfect Competition

    Textbook Chapter: Chapter 7

    MobLab Game: Competitive Market

    Key Learning Objectives:

    • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
    • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
    • Gains from trade (i.e., consumer and producer surplus).
    • Shifts in either supply or demand change equilibrium outcomes.

    Monopoly Pricing

    Textbook Chapter: Chapter 8

    MobLab Game: Cournot (with Group Size=1)

    Key Learning Objectives:

    • Monopolies restrict output in order to increase price.
    • The tension between the quantity price effects of increased output.

    Oligopoly

    Textbook Chapter: Chapter 9

    MobLab Game: Prisoner’s Dilemma

    Key Learning Objectives:

    • Key features of games: payoff matrices, best responses and dominant strategies.
    • Identification of the Nash equilibrium.
    • The (sometimes) conflicting incentives of cooperation and self-interest.
    • Repeated play may lead to more cooperative outcomes.

    MobLab Game: Cournot

    Key Learning Objectives:

    • The underlying logic of the Cournot model: how market price is determined by aggregate output.
    • The equilibrium outcomes of Cournot competition.

    Game Theory

    Textbook Chapter: Chapters 10

    MobLab Game: Matrix: Instructor Specified

    Key Learning Objectives:

    MobLab Survey: Mental Accounting: Sunk Costs

    Key Learning Objectives:

    • Surplus maximization requires ignoring sunk costs.
    • Easier said than done!

    Perfect Competition

    Textbook Chapter: Chapter 7

    MobLab Game: Competitive Market

    Key Learning Objectives:

    • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
    • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
    • Gains from trade (i.e., consumer and producer surplus).
    • Shifts in either supply or demand change equilibrium outcomes.

    Monopoly Pricing

    Textbook Chapter: Chapter 8

    MobLab Game: Cournot (with Group Size=1)

    Key Learning Objectives:

    • Monopolies restrict output in order to increase price.
    • The tension between the quantity price effects of increased output.

    Oligopoly

    Textbook Chapter: Chapter 9

    MobLab Game: Prisoner’s Dilemma

    Key Learning Objectives:

    • Key features of games: payoff matrices, best responses and dominant strategies.
    • Identification of the Nash equilibrium.
    • The (sometimes) conflicting incentives of cooperation and self-interest.
    • Repeated play may lead to more cooperative outcomes.

    MobLab Game: Cournot

    Key Learning Objectives:

    • The underlying logic of the Cournot model: how market price is determined by aggregate output.
    • The equilibrium outcomes of Cournot competition.

    Game Theory

    Textbook Chapter: Chapters 10

    MobLab Game: Matrix: Instructor Specified

    Key Learning Objectives:

    • Allows instructor maximal flexibility in specifying payoff matrices in support of desired teaching outcome.

    MobLab Game: Bertrand

    Key Learning Objectives:

    • Factors facilitating collusion in repeat interactions.

    Regulation and Public Goods

    Textbook Chapter: Chapter 11

    MobLab Game: Externalities w/Policy Interventions

    Key Learning Objectives:

    • With externalities, the equilibrium of a competitive market without interventions is inefficient.
    • By reducing transactions, a tax can increase efficiency (total surplus) in a market with a negative externality, whereas a subsidy can increase surplus in a market with a positive externality.

    Decision Making under Uncertainty

    Textbook Chapter: Chapter 12

    MobLab Game: Risk Preferences: Bomb-Risk Game

    Key Learning Objectives:

    • Helps the player understand exutcomes of Cournot competition.

    Game Theory

    Textbook Chapter: Chapters 10

    MobLab Game: Matrix: Instructor Specified

    Key Learning Objectives:

    • Allows instructor maximal flexibility in specifying payoff matrices in support of desired teaching outcome.

    MobLab Game: Bertrand

    Key Learning Objectives:

    • Factors facilitating collusion in repeat interactions.

    Regulation and Public Goods

    Textbook Chapter: Chapter 11

    MobLab Game: Externalities w/Policy Interventions

    Key Learning Objectives:

    • With externalities, the equilibrium of a competitive market without interventions is inefficient.
    • By reducing transactions, a tax can increase efficiency (total surplus) in a market with a negative externality, whereas a subsidy can increase surplus in a market with a positive externality.

    Decision Making under Uncertainty

    Textbook Chapter: Chapter 12

    MobLab Game: Risk Preferences: Bomb-Risk Game

    Key Learning Objectives:

    • Helps the player understand exutcomes of Cournot competition.

    Game Theory

    Textbook Chapter: Chapters 10

    MobLab Game: Matrix: Instructor Specifiedin a market with a negative externality, whereas a subsidy can increase surplus in a market with a positive externality.

    Decision Making under Uncertainty

    Textbook Chapter: Chapter 12

    MobLab Game: Risk Preferences: Bomb-Risk Gamerisk attitudes vary across a population.

    The Value of Information

    Textbook Chapter: Chapter 13

    MobLab Survey: Bayesian Updating

    Key Learning Objectives:

    • How to appropriately update beliefs upon receipt of new information.

    MobLab Game: Private-Value Sealed-Bid Auction

    Key Learning Objectives:

    • Gain bidding experience.
    • Shows the equivalence between the first and second-price auctions.

    MobLab Game: Common-Value Sealed Bid Auction

    Key Learning Objectives:

    • Gain bidding experience.
    • Gain first-hand experience with the winner’s curse.

    Asymmetric Information

    Textbook Chapter: Chapter 14

    MobLab Game: Market for Lemons

    Key Learning Objectives:

    • Experience in a market with asymmetric information.
    • Asymmetric informast

      Key Learning Objectives:

      • Optimal actions often depend on the actions and thinking of others.

      Cost Analysis

      Textbook Chapter: Chapter 6

      MobLab Game: Production, Entry & Exit

      Key Learning Objectives:

      • Short-run profit maximization involves thinking at the margin.
      • In the long-run equilibrium of a competitive market with identical firms, all firms earn zero economic profits.

      MobLab Survey: Mental Accounting: Sunk Costs

      Key Learning Objectives:

      • Surplus maximization requires ignoring sunk costs.
      • Easier said than done!

      Perfect Competition

      Textbook Chapter: Chapter 7

      MobLab Game: Competitive Market

      Key Learning Objectives:

      • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
      • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
      • Gains from trade (i.e., consumer and producer surplus).
      • Shifts in either supply or demand change equilibrium outcomes.

      Monopoly Pricing

      Textbook Chapter: Chapter 8

      MobLab Game: Cournot (with Group Size=1)

      Key Learning Objectives:

      • Monopolies restrict output in order to increase price.
      • The tension between the quantity price effects of increased output.

      Oligopoly

      Textbook Chapter: Chapter 9

      MobLab Game: Prisoner’s Dilemma

      Key Learning Objectives:

      • Key features of games: payoff matrices, best responses and dominant strategies.
      • Identification of the Nash equilibrium.
      • The (sometimes) conflicting incentives of cooperation and self-interest.
      • Repeated play may lead to more cooperative outcomes.

      MobLab Game: Cournot

      Key Learning Objectives:

      • The underlying logic of the Cournot model: how market price is determined by aggregate output.
      • The equilibrium outcomes of Cournot competition.

      Game Theory

      Textbook Chapter: Chapters 10

      MobLab Game: Matrix: Instructor Specified

      Key Learning Objectives:

      • Allows instructor maximal flexibility in specifying payoff matrices in support of desired teaching outcome.

      MobLab Game: Bertrand

      Key Learning Objectives:

      • Factors facilitating collusion in repeat interactions.

      Regulation and Public Goods

      Textbook Chapter: Chapter 11

      MobLab Game: Externalities w/Policy Interventions

      Key Learning Objectives:

      • With externalities, the equilibrium of a competitive market without interventions is inefficient.
      • By reducing transactions, a tax can increase efficiency (total surplus) in a market with a negative externality, whereas a subsidy can increase surplus in a market with a positive externality.

      Decision Making under Uncertainty

      Textbook Chapter: Chapter 12

      MobLab Game: Risk Preferences: Bomb-Risk Game

      Key Learning Objectives:

      • Helps the player understand expected value and thinking on the margin.
      • Helps a player understand her own preferences towards risk, and how st

        Key Learning Objectives:

        • Optimal actions often depend on the actions and thinking of others.

        Cost Analysis

        Textbook Chapter: Chapter 6

        MobLab Game: Production, Entry & Exit

        Key Learning Objectives:

        • Short-run profit maximization involves thinking at the margin.
        • In the long-run equilibrium of a competitive market with identical firms, all firms earn zero economic profits.

        MobLab Survey: Mental Accounting: Sunk Costs

        Key Learning Objectives:

        • Surplus maximization requires ignoring sunk costs.
        • Easier said than done!

        Perfect Competition

        Textbook Chapter: Chapter 7

        MobLab Game: Competitive Market

        Key Learning Objectives:

        • The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
        • Price discovery: the equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
        • Gains from trade (i.e., consumer and producer surplus).
        • Shifts in either supply or demand change equilibrium outcomes.

        Monopoly Pricing

        Textbook Chapter: Chapter 8

        MobLab Game: Cournot (with Group Size=1)

        Key Learning Objectives:

        • Monopolies restrict output in order to increase price.
        • The tension between the quantity price effects of increased output.

        Oligopoly

        Textbook Chapter: Chapter 9

        MobLab Game: Prisoner’s Dilemma

        Key Learning Objectives:

        • Key features of games: payoff matrices, best responses and dominant strategies.
        • Identification of the Nash equilibrium.
        • The (sometimes) conflicting incentives of cooperation and self-interest.
        • Repeated play may lead to more cooperative outcomes.

        MobLab Game: Cournot

        Key Learning Objectives:

        • The underlying logic of the Cournot model: how market price is determined by aggregate output.
        • The equilibrium outcomes of Cournot competition.

        Game Theory

        Textbook Chapter: Chapters 10

        MobLab Game: Matrix: Instructor Specified

        Key Learning Objectives:

        • Allows instructor maximal flexibility in specifying payoff matrices in support of desired teaching outcome.

        MobLab Game: Bertrand

        Key Learning Objectives:

        • Factors facilitating collusion in repeat interactions.

        Regulation and Public Goods

        Textbook Chapter: Chapter 11

        MobLab Game: Externalities w/Policy Interventions

        Key Learning Objectives:

        • With externalities, the equilibrium of a competitive market without interventions is inefficient.
        • By reducing transactions, a tax can increase efficiency (total surplus) in a market with a negative externality, whereas a subsidy can increase surplus in a market with a positive externality.

        Decision Making under Uncertainty

        Textbook Chapter: Chapter 12

        MobLab Game: Risk Preferences: Bomb-Risk Game

        Key Learning Objectives:

        • Helps the player understand expected value and thinking on the margin.
        • Helps a player understand her own preferences towards risk, and how risk attitudes vary across a population.

        The Value of Information

        Textbook Chapter: Chapter 13

        MobLab Survey: Bayesian Updating

        Key Learning Objectives:

        • How to appropriately update beliefs upon receipt of new information.

        MobLab Game: Private-Value Sealed-Bid Auction

        Key Learning Objectives:

        • Gain bidding experience.
        • Shows the equivalence between the first and second-price auctions.

        MobLab Game: Common-Value Sealed Bid Auction

        Key Learning Objectives:

        • Gain bidding experience.
        • Gain first-hand experience with the winner’s curse.

        Asymmetric Information

        Textbook Chapter: Chapter 14

        MobLab Game: Market for Lemons

        Key Learning Objectives:

        • Experience in a market with asymmetric information.
        • Asymmetric information may lead to adverse selection and market failure.

        Bargaining and Negotiation

        Textbook Chapter: Chapter 15

        MobLab Game: Bargaining: Alternating Offer

        Key Learning Objectives:

        • Features of a two-party negotiation may offer an advantage to a particular party. Fairness considerations may lessen any advantage.
        1. 8th edition.