http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/lse-lecture-darwin-economy http://www.tutor2u.net/blog/index.php/economics/comments/lse-lecture-darwin-economy#When:22:36:54Z Last week I took some of my pupils to the LSE for Professor Robert Frank on “Liberty, Competition and the Common Good: The Darwin Economy”, chaired by Paul Mason. Frank’s book is about the fact that Charles Darwin understanding of competition offers a better guide to economic reality than Adam Smith and rational choice theory. Smith’s view is putting us all at risk by preventing us from seeing that competition alone will not solve our problems. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Game Theory, Market Failure, Externalities, Teaching of Economics, 2011-11-13T22:36:54+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-price-discrimination-in-the-e-book-market http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-price-discrimination-in-the-e-book-market#When:09:51:07Z Seth Godin’s Domino Project is an attempt to re-fashion the way in which e-books are published, sold and priced. This blog is particularly interesting for teachers and students who consider different forms of price discrimination. It proposes (at least) three different price tiers: $1.99 ebooks - a clearing price for the majority of e-books $5 ebooks. This is the price for bestsellers, hot titles and academic titles required by courses $10 - $20 ebooks. This is the price you will pay to get the book first, to get it fast, to get it before everyone else Read paying for first What do you think? How do you see e-book pricing tactics evolving as the market grows? The UK Office of Fair Trading is currently investigating the market for e-books in the UK amid allegations of price fixing / collusion by several leading publishers. You can access the OFT investigation using this link. Further reading: Guardian (August 2011): Apple and major publishers face lawsuit over ebook ‘price fixing’ Telegraph: EU raids publishers in ebook price-fixing probe By way of background - new research has found that the average e-book price of front-list e-books across the world was €10.50 net of taxes. The average price of UK frontlist e-books was €10.80, €1.50 more than equivalent US titles, but less than those in Germany, Spain and France. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Game Theory, Business Economics, Monopoly, Oligopoly, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-10-31T09:51:07+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/collusion-in-the-classroom http://www.tutor2u.net/blog/index.php/economics/comments/collusion-in-the-classroom#When:07:20:51Z Today we played a variety of ‘prisoner’s dilemma’ games with my U6th economists, highlighting the game theory element of oligopolistic markets. (A nice mix of collusion between the pupils was apparent, coupled with the usual cheating on agreements and back-stabbing – always fun to have in the classroom!) AS and A2 Specifications, EdExcel Economics Unit 3, A2 Micro, Behavioural Economics, Game Theory, Business Economics, Oligopoly, 2011-10-08T07:20:51+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-at-the-movies-the-game-of-chicken http://www.tutor2u.net/blog/index.php/economics/comments/economics-at-the-movies-the-game-of-chicken#When:08:14:00Z This classic scene from the film Footloose can be used to illustrate the game of Chicken - a popular example of game theory.   Behavioural Economics, Game Theory, Teaching of Economics, Economics at the Movies, 2011-07-18T08:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/competition-plan-for-universities http://www.tutor2u.net/blog/index.php/economics/comments/competition-plan-for-universities#When:15:36:01Z Competition, AS Microeconomics, A2 MicroeconomicsSo the Universities White Paper has been published.  Words like “Competition” on news feeds instantly make me sit up and take notice.  As my Year 12s embark on their odyssey into market structures and ever more close encounters with efficiency, I think this might just be the case study of the moment.  After all its subject matter is foremost in many of their minds. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Game Theory, Business Economics, Competitive Markets, Monopolistic Competition, Competition Policy, Government Intervention, Maximum Prices, Market Failure, Information Failure, 2011-06-28T15:36:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/super-cooperators-and-game-theory http://www.tutor2u.net/blog/index.php/economics/comments/super-cooperators-and-game-theory#When:08:50:00Z It was a delight to hear Martin Nowak and Roger Highfield at the RSA last night when they delivered a presentation on aspects of their new book Supercooperators - The Mathematics of Evolution, Altruism and Human Behaviour. The video of the presentation is now available below Martin Nowak is a celebrated Professor of Biology and Mathematics at Harvard University and his strong presentation was a model of clarity and insight drawing heavily on the classic Prisoners’ Dilemma as the basis for a discussion on the importance of direct and indirect repciprocity as the basis for co-opertaive behaviour between humans. He was joined by Roger Highfield, Editor of the New Scientist.   Behavioural Economics, Game Theory, Teaching of Economics, 2011-05-19T08:50:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/yet-another-airline-cartel-story http://www.tutor2u.net/blog/index.php/economics/comments/yet-another-airline-cartel-story#When:21:38:00Z Just in case you wanted one more example of price fixing, cartels, collusion and whistle blowing, here it is. The EU has boosted its revenue for the year by fining 11 airlines almost 800m euros for fixing cargo prices between 1999 and 2006. AirFrance-KLM are hit the hardest, at 340m, followed by BA at 104m - but Lufthansa, who blew the whistle on the other airlines involved, are not fined at all. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Behavioural Economics, Game Theory, Business Economics, Oligopoly, Competition Policy, European Economy, Government Intervention, Regulation, Transport Economics, 2010-11-09T21:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/cluster-bombs http://www.tutor2u.net/blog/index.php/economics/comments/cluster-bombs#When:22:56:00Z Here is a good example of evidence that “prisoners’ dilemmas” can be resolved through cooperation/collusion, as a global cluster bomb ban comes into force this week. The Convention on Cluster Munitions bans the stockpiling, use and transfer of virtually all existing cluster bombs, and also provides for the clearing up of unexploded munitions. It has been adopted by 108 states, of which 38 have ratified it. Although 22 out of the 28 countries in NATO have joined, many of the world’s major military powers - including the US, Russia and China - are not signatories to the treaty, showing the major problem that still exists in this version of the prisoners’ dilemma… that is the incentive to “cheat” or “not cooperate” is always very strong… AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Behavioural Economics, Game Theory, Teaching of Economics, 2010-08-02T22:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oligopolies http://www.tutor2u.net/blog/index.php/economics/comments/oligopolies#When:13:25:01Z A good applied example here of the strategic interdependence and non-price competition that occurs in oligopolistic markets. This example focuses on the games console market, where in response to the Nintendo Wii’s motion-sensor controllers, Sony have unveiled their own one; whilst Microsoft is joining the party later this year to go even further with a full body motion controller(!). Its a good example of how oligopolistic industries interdependence (follower-leader relationship) can be of benefit to consumers via dynamic efficiency aims. A2 Micro, Behavioural Economics, Game Theory, Business Economics, Competitive Markets, Oligopoly, 2010-03-11T13:25:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tv-time http://www.tutor2u.net/blog/index.php/economics/comments/tv-time#When:16:59:00Z Lots of Economics on TV this weekend: A2 Micro, AS Micro, Behavioural Economics, Game Theory, Emerging Economies, Economic Growth, Government Intervention, Buffer Stocks, Government Failure, Regulation, Market Failure, De-Merit Goods, Externalities, Information Failure, Teaching of Economics, 2010-03-07T16:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/how-markets-fail-the-logic-of-economic-calamities http://www.tutor2u.net/blog/index.php/economics/comments/how-markets-fail-the-logic-of-economic-calamities#When:08:13:01Z A huge number of well-known economists and a remarkable number of ideas make an appearance in John Cassidy’s new book How Markets Fail – the logic of economic calamities. From Akerlof and Arrow to Von Neumann and Walras, John Cassidy’s ambitious and lucid work takes us on a swift journey through over two hundred years of economic thought and policy-making through to the moment when the global financial system stared over the abyss in the early autumn of 2008. A2 Macro, AS Macro, Behavioural Economics, Game Theory, Cycles and Shocks, Economic History, Market Failure, Teaching of Economics, Credit Crunch, 2009-12-26T08:13:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/they-think-its-all-over http://www.tutor2u.net/blog/index.php/economics/comments/they-think-its-all-over#When:09:01:00Z I wonder what John Nash would have to say about this unorthodox winning strategy in a football match. This Barbados vs Grenada football match yielded some interesting and entirely rational tactics! A2 Micro, Behavioural Economics, Game Theory, Quirky Trivia, 2009-12-08T09:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/law-and-morality-in-economic-life http://www.tutor2u.net/blog/index.php/economics/comments/law-and-morality-in-economic-life#When:09:37:00Z It is easier to destroy a society than it is to build it. And tipping points that cause people en mass to lose faith and confidence in institutions are more likely than we might assume. This was one of the themes from an outstanding lecture given at the Royal Institution yesterday by Sir Partha Dasgupta as this year’s Royal Economic Society annual public lecture. Drawing on a lifetime of experiences and research, Sir Partha enthralled his audience with a brilliantly structured talk on the growing importance of social norms in helping us to understand more clearly the gulf in economic wealth and life chances between different parts of the world. A2 Macro, A2 Micro, AS Macro, AS Micro, Behavioural Economics, Game Theory, Economic Growth, Standard of Living, Teaching of Economics, 2009-11-26T09:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/going-once-going-twice-still-going-once-going-twice http://www.tutor2u.net/blog/index.php/economics/comments/going-once-going-twice-still-going-once-going-twice#When:18:09:00Z (A hat-tip to C. Gee for spotting this!) For those of you who enjoyed Nudge, here is Professor Thaler in the New York Times discussing an interesting behavioural analysis of the website Swoopo.com. (If you haven’t visited the site yet, it’s very interesting to watch!). A2 Micro, Behavioural Economics, Game Theory, 2009-11-16T18:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oxbridge-economics-introduction-to-game-theory http://www.tutor2u.net/blog/index.php/economics/comments/oxbridge-economics-introduction-to-game-theory#When:08:14:00Z Here is an “Introduction to Game Theory” lecture, which offers a broad introduction to the field, with some exercises to do at the end. (The yellow-underlined text hyperlinks out to other resources). Behavioural Economics, Game Theory, Teaching of Economics, UCAS and Oxbridge Advice, 2009-10-04T08:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-boy-who-harnessed-the-wind1 http://www.tutor2u.net/blog/index.php/economics/comments/the-boy-who-harnessed-the-wind1#When:07:35:00Z This fantastic true story of boy’s dream to improve the standard of living in his village in Malawi is both inspiring and full of good economic examples (and therefore a winning combination!). William Kamkwamba’s family had to pull him out of school in Malawi as they could no longer afford the £50 annual fee; however, he continued to use his local library to study science and set out on a project to use items of junk and waste to build a windmill in order to bring electricity and running water to his village. There are some lovely examples here relating to development in terms of grassroots approaches, some of the problems faced by those living in developing countries, the positive externalities associated with education, alternative measures to tackling climate change as well as an inspirational entrepreneurial story. I for one will be buying the book telling the story of this young man’s vision. Behavioural Economics, Game Theory, Economic Growth, Market Failure, Externalities, Public Goods, Poverty and Inequality, Development Economics, 2009-10-01T07:35:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/kick-start-for-the-economy http://www.tutor2u.net/blog/index.php/economics/comments/kick-start-for-the-economy#When:07:38:00Z The British Retail Consortium estimate that England’s qualification for the World Cup finals in South Africa next year could be worth £1.25 to the UK economy next year. Pubs could take an extra £30-40mn at each live match they show, and electrical manufacturers will get boom sales in flat-screen TV’s to those watching at home and supermarkets will sell huge quantities of food and drink to keep the blood sugar levels up and combat the nerves. Spending on world cup advertising in 2006 generated £300mn, sports kit manufacturers Umbro will be rushing to make more England shirts, and flights and package tours to South Africa are selling out fast. Could this be the news we need to combat the recession and get people spending again? The Times leader writer yesterday thought it might be; in spite of the trillions that have been spent in the last year, this could finally be the news that we need. I see lots of educational opportunities too - game theory as illustrated by the penalty shoot-out for a start (should you shoot left or right? And can the goalie guess which way the penalty taker will go, to save the match?). Not all businesses will be so happy though. In 2006 estate agents found a huge drop of interest in house buying during the World Cup, and some cinemas had to close for the month with too few visitors. Not to mention the potential effect on A level students: the tournament kicks off on 11th June, with group matches and the knock-out round of 16 lasting through the rest of that month – just when the exams will be scheduled. Best to get the revision done early…….. Behavioural Economics, Game Theory, Cycles and Shocks, Aggregate Demand, Consumer Spending, UK Economy, Recession Watch, Credit Crunch, 2009-09-12T07:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/game-theory-and-north-korea http://www.tutor2u.net/blog/index.php/economics/comments/game-theory-and-north-korea#When:14:09:00Z In the post-AS lull, we have been studying the basics of game theory; and this week had a great discussion on game theory applied to the current political hot potato that is North Korea and its nuclear program.  Various aspects of game theory can be applied to the issue of North Korea’s nuclear programme, from credible threats, brinkmanship, to dominant strategies. Behavioural Economics, Game Theory, Teaching of Economics, 2009-06-29T14:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-mind-of-the-market http://www.tutor2u.net/blog/index.php/economics/comments/the-mind-of-the-market#When:12:07:00Z Michael Shemer's new book "The Mind of the Market" comes up with an interesting hypothesis that, just like humans, the market has a collective mind that drives it - just like the human mind the mind of the market has evolved over time as it is a manifestation of a collective willThe causes of financial and economic crisis and distress are complex and multi-layered. There will be much written about it in the months and years to come and I suspect many of the best new writing will focus on neurological explanations for the behaviour of agents.   A2 Micro, Behavioural Economics, Game Theory, Teaching of Economics, Credit Crunch, 2009-03-08T12:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/game-theory-and-emotions http://www.tutor2u.net/blog/index.php/economics/comments/game-theory-and-emotions#When:13:00:33Z Alex Pugh draws from the work of Dawkins, Matt Ridley, Robert Frank and and John Von Neumann to consider how emotions play a role in our strategic decision-makingThe most interesting and recently controversial application of economic theory has been in the realms of Game Theory. Game Theory was born in the inhuman brain of Johnny Von Neumann and is the branch of maths which especially suits the “dismal science” of economics. Fundamentally it digresses from classical economic assumptions in that it sees the world where the right thing to do depends on what other people do. The point of Game Theory, like much of science and economics is to find a simplified model of the real world, or in other words a universal prescription (which became know as the Nash equilibrium – the least worse in any circumstance). A2 Micro, Behavioural Economics, Game Theory, 2009-01-11T13:00:33+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tobacco-price-fixing http://www.tutor2u.net/blog/index.php/economics/comments/tobacco-price-fixing#When:07:00:01Z John Fingleton’s tenure at the competition watchdog the Office of Fair Trading has coincided with some huge fines for price collusion within oligopolistics markets and yesterday came one of the biggest with a tobacco manufacturer and five retailers agreeing to pay the biggest collective penalty yet imposed for price-rigging after admitting their role in efforts to boost the cost of cigarettes.The six companies agreed to pay £132m to settle the charges with Gallaher, one of two tobacco manufacturers involved in the case, shouldering the lion’s share of the burden after agreeing to pay £93m.The Times reports that “The six companies fined made prompt admissions of illicit competition practices in return for lenient fines.” - another example of game theory and the prisoners dilemma in action! Coverage here BBC news: Six firms fined in tobacco probe The Telegraph: OFT’s hefty fines for tobacco price fixing The Times: Supermarkets and tobacco firm are fined £173m for price fixing Office of Fair Trading press release There is a recent profile of John Fingleton here in the Times   A2 Micro, Behavioural Economics, Game Theory, Business Economics, Oligopoly, Competition Policy, Government Intervention, Regulation, 2008-07-12T07:00:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/1st-or-2nd http://www.tutor2u.net/blog/index.php/economics/comments/1st-or-2nd#When:23:13:00Z Should you choose to go first or second in a penalty shoot-out? Or serve first rather than receive in a grudge tennis match? Tim Harford has a neat piece in today’s Financial Times which unearths some research which seems to suggest a fairly decisive advantage for teams that win the toss of a coin and opt to take the first shot in a shoot-out! Unless of course they crack under the pressure! Behavioural Economics, Game Theory, Teaching of Economics, 2008-07-05T23:13:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/probability http://www.tutor2u.net/blog/index.php/economics/comments/probability#When:19:25:00Z Radio 4’s In Our Time recently looked at the issue of probability Behavioural Economics, Game Theory, 2008-06-15T19:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/learning-lessons-from-experiment-11 http://www.tutor2u.net/blog/index.php/economics/comments/learning-lessons-from-experiment-11#When:11:16:00Z Last Thursday I guinea pigged for an economics experiment at UCL. Unfortunately it wasn’t anything as exciting as Tim’s ones, no apples or chocolates were on offer but it was fascinating to see an economics lab from the inside. The invitation simply named it “Experiment 11” which I thought to be rather mysterious but it was probably just because economists don’t have an imagination. I’ll try and describe what it was like, but it will be very confusing so bear with me. Behavioural Economics, Game Theory, Quirky Trivia, 2008-04-21T11:16:00+00:00