Week 1, lectures one and two
Week 1, lectures one and two Econ 101
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This 2 page Class Notes was uploaded by Taryn manciu on Monday October 10, 2016. The Class Notes belongs to Econ 101 at University of Oregon taught by Urbancic M in Fall 2016. Since its upload, it has received 72 views.
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Date Created: 10/10/16
EC 101 Week 1 Lecture 1 & 2 Self Interest - -Benefits society - -An interest of the market participants gives incentives to work and produce, which in turn benefits society Tragedy of the Commons - Occurs when nobody in particular has property rights to an open access resource - -While it would benefits everyone collectively to manage the resource, each person has an incentive to exploit the resource before someone else does - Left unchecked can lead to a collapse of the resource Key Concepts in the discipline of EC. - Scarcity and choice IN CLASS EXAMPLE OF TRAGEDY OF THE COMMONS: Prof. chose 3 teams of two to “fish” for poker chips on the ground. There were four different colors of poker chips, each worth a different amount, in the second round the point values would double for each of the chips Each team got to fish for one minute before switching and fishing again. By the second round there were none of the highest point value “fish” left. In analysis, it would have been better for everyone to wait to get the highest scoring fish in the second round so they could maximize their earning potential. BUT because you couldn’t be sure if everyone would wait till the second round, everyone got the highest scoring fish in the first round for the chance they wouldn’t get that chance in the second round. Moral of the game is…get what you can while you can…otherwise someone else might get it before you. “Economics is the study of how individuals and societies choose to use the scare resources that nature and previous generations have provided.” Major Divisions of EC - Micro (behavior and decision making of individuals) - Macro (behavior and trends of the nation) More Tragedy of the Commons - Public bathrooms are gross…why? Because there is no ownership, and therefore no sense of responsibility. Because they are public and not individually owned, the public that uses them doesn’t feel the need to be responsible for their condition, there fore they go untaken care of. Prisoners Dilemma - When each player follows their own interests it ends up bad for everyone o SOLUTION: External enforcer (vindictive boss, government) Repeated interactions (raise stakes, establish trust, communication) Explicit communication and trust.