ECON 450 Preview, The Royal Lesson Edition

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.