The Economic Consequences of Cognitive Dissonance

Akerlof and Dickens propose a theory of cognitive dissonance, or the discomfort that comes from holding conflicting beliefs, in the setting of workplace safety, though this theory can be incorporated in a number of settings. Cognitive dissonance can have implications for how people make decisions and evaluate information. Allison Jaros, Lucy Chang, Erin Lett, and Morgan Lucas presented this paper to the Econ 206 class and compiled the notes on The Economic Consequences of Cognitive Dissonance.

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Maps of Bounded Rationality: Psychology for Behavioral Economics

Daniel Kahnemann continues his exploration into utility theory and the decisions under risk. In this paper, Kahnemann summarizes his research that highlights the differences between empirical decision making and the choices individuals are expected to make based on conventional rational agent models. Tevy Chawwa, Igor Hernandez, Nan Li, and Laura Paul provided the notes summarizing Maps of Bounded Rationality and presented them paper to the Econ 206 class.

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Why is Central Paris Rich and Downtown Detroit Poor?

Do amenities really make the difference in a lively, thriving downtown and a desolate city center? Brueckner, Thisse, Zenou, in Why is Central Paris Rich and Downtown Detroit Poor? An Amenity Based Theory,  examine why these two cities, as examples, have starkly different population profiles across the city landscape. Additionally, Ben Barber, Ganna Tkachenko, Zhi Chen, and Xiaoshu Bei provide empirical data to accept or refute this theory.

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Prospect Theory: An Analysis of Decision Under Risk

In the late 1970s, two psychologists named Kahnemann and Tversky, questioned the expected utility theory that had been previously developed by economists. This work was the first publication in a major economics journal by non-economists, and eventually this pair was awarded a Nobel Prize. Belen Chavez, Yan Huang, Tanya Mallavarapu, and Quanhe Wang presented this paper to the Econ 206 class and provided the notes on Porpsect Theory: An Analysis of Decision under Risk. Enjoy!

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Racial Prejudice in a Search Model of the Urban Housing Market

Paul Courant explored a theory of Racial Prejudice in a Search Model of the Urban Housing Market, where he concluded that if whites are averse to selling their homes to blacks, an equilibrium in which blacks pay more than whites is sustainable, causing the housing market to be racially segmented. Enjoy the notes compiled by Elyas Fermand, Annie Tao, Aditya Rachmanto, and Lara Converse!

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Handcuffs for the Grabbing Hand? Media Capture and Government Accountability

Besley and Prat discuss the role of the media in government accountability. What happens when a politician is able to bribe the media? How does this affect the politician’s relationship with the voters? Andreas Moller, Biyuan Zhang, Yanchi Yu, William Snyderwine, and Frank Guan presented this pertinent election year topic. Enjoy Handcuffs for the Grabbing Hand? Media Capture and Government Accountability!

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Perfect Equilibrium in a Bargaining Model

In Perfect Equilibrium in A Bargaining Model, Rubinstein proposes a game in which two individuals are trying to agree on division of a pie in a dynamic setting. Alla Khalitova, Jeff Faris, Lijing Song, and Xiao Qin explain this slightly complicated but very important model well in their notes on Perfect Equilibrium in A Bargaining Model.

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The Economics of Identity

George Akerlof and Duke’s own Rachel Kranton first developed the Economics of Identity to explain the explain seemingly irrational decisions made by individuals in an effort to align with a group in which they closely identify. Andreas Moller, William Snyderwine, Biyuan Zhang, Frank Guan, and Yanchi Yu presented the details of  The Economics of Identity to the Econ 206 class. Enjoy!

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The Market for Lemons: Quality Uncertainty and the Market Mechanism

How do you know you are getting a true bargain when purchasing a used item? How do you know whether the person you are interviewing for the job is truly capable rather than a slacker? Liz Malm, Justina Adamanti, Yuqing Hu, and Krishanu Ray discuss adverse selection and quality uncertainty in George Akerlof’s classic theory on The Market for Lemons.

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Relative Backwardness, Direct Foreign Investment and the Transfer of Technology

How does technology move from more advanced countries to the relatively backward ones? What is the relationship between technology transfer and foreign direct investment? Findlay uses his simple dynamic model of technology diffusion to give insight to these two questions. Enjoy the notes compiled by Tevy Chawwa, Nan Li, Igor Hernandez, and Laura Paul on Relative Backwardness!

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