The next LSB event will be on November 7th at 4:30pm in Science 102:
Harry Kraemer(Executive Partner, Madison Dearborn Partners; Clinical Professor of Management and Strategy at Kellogg School of Management, Northwestern University; Former CEO of Baxter International; Chairman of the Board of Trustees at Lawrence University) will be speaking on Values-Based Leadership. Some preliminary readings are outside Briggs 212, or online here, here, and here. If you are a Lawrence student or faculty member interested in joining Mr. Kraemer and others for dinner afterwards, please let Adam Galambos know.
Archive for October, 2009
The next LSB event will be on November 7th at 4:30pm in Science 102:
For those of you wondering what this winter’s ECON 450, Economics of the Firm, is all about, might consider taking a peek over at the Machiavellian personality test. These are exactly the types of issues that we will be tackling in class — how different assumptions about how people actually think and behave shapes markets and organizations.
As you probably know, Machiavelli famously said that the “prudent ruler ought not keep faith when by doing so it would be against his interest…” Recent Nobel Prize winner Oliver Williamson responds by saying, “the more important lesson, for the purposes of studying economic organization, is this: Transactions that are subject to ex post opportunism will benefit if appropriate safeguards can be devised ex ante.”
Well said!. No wonder he gets his own parking spot.
Another important lesson you might want to keep in mind, especially around grading time, is that I received a “high Mach” on the test, revealing my high levels of Machiavellian thinking.
Anyone care to take a stab at estimating the consumer surplus generated from the price war blowing up between Amazon, Wal-Mart, and Target?
The price war began last week when Wal-Mart announced that it would offer Walmart.com customers who preordered any of 10 of the coming holiday season’s biggest potential best sellers the chance to buy the books in hardcover editions for just $10. Typically new hardcovers sell for $25 to $35, although some discounting is common.
Amazon.com quickly matched Wal-Mart’s preorder price on the same books, which include “Ford County” by Mr. Grisham, “Under the Dome” by Mr. King and “Going Rogue,” Sarah Palin’s memoir. Wal-Mart then lowered the price to $9, and Amazon followed suit. By late Friday afternoon Wal-Mart had cut another penny off the price.
On Monday, Target entered the fray by offering six of the preorder titles on Target.com for $8.99. By Tuesday Wal-Mart had lowered the price on those titles to $8.98.
Full story here
Interestingly, independent booksellers are claiming that this price competition “is damaging to the book industry and harmful to consumers.”
Well, I don’t know how damaged consumers are by paying half price for hardcover books, but it is certainly won’t be good for independent booksellers.
From the Wall Street Journal we have a story tallying up the winners and losers from proposed health care reform. It looks like the drug makers are in for a bonanza, though things might not be so cheery for hospitals and insurers.
Meanwhile, the Department of Justice has decided against prosecuting growers and shops that sell state-sanctioned medical marijuana. Certainly, one of the big costs of being an illicit drug producer is the threat of legal sanctions, which is why organized crime often weighs in. With the liberalization of drug enforcement, will mom & pop producers run the Mexican cartels out of business?
The program is Page 404 and my host is Avi Steiner.
We will be taking the lid off the economics of organization (with guile), taking on topics from the assumption of rationality in economics to grazing rights in Switzerland to who (probably) owns the McDonalds up the street. It should be a fun half hour.
The first event of the LSB program this year is the Entrepreneurial Ventures Summit on October 18th, at 4:00 pm in the Hurvis room (2nd floor in the campus center). See this flier for more information. Please sign up in the career center.
Sometimes it important not trying to read too much into what one hears. Krugman draws an intriguing or at least amusing relationship between the Fed chair’s statements and statements made by Peter Sellers character in Being There. Enjoy.
Oliver Williamson and Elinor Ostrom are sharing this year’s Nobel Prize in Economics. Williamson is out of what is known as the Carnegie School of organizational economics, and is the titular head of “transaction cost economics.” If you wanted a theoretical model to help understand why Lawrence contracts out its food service rather than doing it internally, you might pick up a copy of The Economic Institutions of Capitalism. Much, much more on Williamson in the Economics of the Firm course this winter.
Ostrom is one of the founders of the Indiana School, and thinks about collective management of common property resources. She has found that private groups are often able to avoid the dreaded tragedy of the commons and become long-term stewards of common property resources. More on Ostrom in Econ 385, Natural Resource Economics.
Sadly, there was no winner in the Pick the Nobel contest. We will put the pears in the storeroom and award them to next year’s winner. See you then.
The Nobel Prize in economics will be awarded next week, and this kicks off the Official Lawrence University Pick the Economics Nobel Winner competition.* You should e-mail your picks to me. One entry per person.
So you might be asking yourself who is even in the running. Well, you can find the latest odds here.
At this point, you might be saying to yourself, “hold the phone, you can bet on stuff like that?” Indeed, you can bet on just about anything now, though in the polite academic ease we call these “prediction markets.” There is very much a burgeoning field of study here, and these markets generally do a better job than polls or pundits at forecasting the future. One point that I find particularly interesting is that these tend to work pretty well even if people are just playing for fun and not real money.
Outside of the wagering angle, it might be interesting to take a look up and down that list and see who you recognize and why. Most of these guys have advanced the field in some way, and understanding their contributions might help you to understand different areas of economics exploration. The odds-on favorite, Eugene Fama, is the man behind the “efficient markets hypothesis,” which arouses passions of all sorts. Can you beat the market? Do prices really convey useful information? What exactly is an “efficient market.” The irony here is that if you believe in efficient markets, you should go ahead and enter Fama in the contest.
Second on the list is Paul Romer, who is a pioneer of endogenous growth theory and the hero of the excellent Knowledge and the Growth of Nations, but he might be better-known to you as the guy who developed Aplia.
There are many others that have made their mark on my thinking. If you take an environmental course, you will learn about Marty Weitzman (prices v. quantities) and Bill Nordhaus (climate change). Paul Milgrom and Oliver Williamson are both central figures in the theory of the firm. The list goes on.
So, email your picks to me. The prize will be awarded at the next Economics Club meeting.
*First prize will be a large sack of pears. Multiple winners will be sorted out by who chose the candidate first. My pick is Ben Bernanke, but I would be happy to cede my pears to anyone else who selects the Fed chair.
The Department of Economics is presenting a Graduate School In Economics advising session on Monday, October 12th at 4:00pm in Briggs 217. We strongly encourage all students (especially sophomores, juniors and seniors) who are considering doing graduate work in Economics to attend. Professors Finkler, Karagyozova, Gerard and Galambos will be answering your questions about applying to graduate school. Please let any one of them know in advance if you plan to attend.
The Career Center has organized a trip to Wells Fargo Wealth Management on Thursday, October 22 (Thursday of reading period). Vans will leave from the Career Center driveway at 8 a.m. and return at approximately 2:30 p.m. The tour of Wells Fargo will take place between 10 and noon at the Menomonee Falls site.
If you’d like to go, stop by the Career Center to sign up.
Who do you suppose is America’s most influential economist? Paul Krugman? Greg Mankiw? Paul Samuelson? Steve Levitt?
The answer may well be Larry Summers, the chair of the National Economic Council for President Obama. This week’s New Yorker carries a (lengthy) profile that is good reading, especially for its peek at what the White House does (or thinks it does) to manage the US economy.
Who ever said economists were boring? He has had a stellar academic career. He served in several capacities in the Clinton Administration, ultimately replacing Robert Rubin as Treasury Secretary. He was also tapped as the president of Harvard, where he was ousted in spectacular fashion. And now he’s back in Washington amidst the biggest economic calamity since 1980 or 1930, depending on who you listen to.
If you can’t get enough, Felix Salmon provides some very thought-provoking commentary on the article.
This week’s Economist magazine features a special report on the world economy. The authors address the current state of the world economy as well as conjecture about a “new normal” for the path forward. This indepth and well referenced report serves as great background for discussion about the state of the world’s economy, how we reached this state, and what are the prospects for the future. Follow the link below to indulge.