Monthly Archives: March 2011

Traditionally, a student whose family cannot pay for private school is assigned to a public school according to where she lives.  A student assignment mechanism is necessary in states or districts with school choice.  Many currently used mechanisms are legally ill-defined or establish procedures which induce parents to play complicated admissions games; often, misrepresenting their [...]

The interaction of quality differences and uncertainty is worth exploration. As “The Market for ‘Lemons’” by George A. Akerlof demonstrates, it may explain important institutions of the market, while offering structure to several issues, such as credit markets in under-developed countries, the costs of dishonesty, and the insurance market. In many markets, buyers judge the [...]

“Mortality Decline, Human Capital Investment, and Economic Growth,” by Sebnem Kalemli-Ozcan, Harl E. Ryder,  and David N. Weil examines the role of increased life expectancy in raising human capital investment during the process of economic growth. The author develops a continuous time, overlapping generations model in which individuals make optimal schooling investment choices in the [...]

In “Personal Contacts and Earnings,” Mortensen and Vishwanath examine the equilibrium effects of different mixes of two information sources that workers use in searching for jobs: direct application to employers, and personal contacts.  The analysis shows that workers that are otherwise identical can end up with different wage outcomes solely based on the amount of [...]

In his paper, “Urban Job Creation and Unemployment in LDCs,” Blomqvist considers two seminal papers on urban job creation and unemployment in LDCs, one by Todaro (1969) and one by Harris and Todaro (1970), in the following for convenience referred to as HT. While both of these papers were motivated by the curious economic phenomenon [...]

Gary Becker’s, “A Theory of Marriage: Part 1″ provides and economic analysis of the reasons why people choose to marry each other.  He argues the one principle that allow for this analysis are that since married persons choose their mates (or have them chosen), this invokes the theory of preferences.  Another principle that allows for [...]

For those interested, attached is a copy of the midterm exam for the spring 2011 Advanced Microeconomics class. Click here to view the midterm.

The importance of “Optimal Health Insurance and Provider Payments” by Ching-to Albert Ma and Thomas G. McGuire is based on the following issue.  Changes in Health Care markets include complex contracts between insurer-physician and insurer-patient. I.e ‘Capitation Contracts’ or ‘Contracts based on some measures of quality of treatment’.  These complex arrangements are not explained by [...]

“Economics and Identity” by George Akerlof and Rachel Kranton expands traditional standard utility theory to include the notion of identity, or self image.   An individual’s utility function, rather than only including his actions and those of others individuals, will include a identity as a component.  Identity itself is a function of an individuals assigned social [...]

Attached to this post are the notes Traviss, Antonios, Jianxing, and Yanxi prepared on “Crime and Punishment: An Economic Approach,”  by Gary Becker.  The paper analyzes the normative questions of how much punishment and how many resources should be used in the prevention of crime.  Crime and punishment are addressed in a constrained optimization problem [...]