Policy Studies 102
Rational Policies Toward Imperfectly Rational Behavior
Fall 2002
Instructor: Mark A.R. Kleiman
Office: Public Policy Building 6319
Phone: (310) 206-3234
Email: kleiman@ucla.edu, MARKleiman@aol.com
TA: Karolina N. Saloun
Phone: (310) 825-6148
Email: kaza@ucla.edu, karonic@aol.com
Classroom: 1246 Public Policy Building
Monday/Wednesday/Friday 11:30-12:20PM
Discussion Section: Room 1246, Friday 1:00-2:00 PM
_________________
Central Idea of the Course
The idea of an individual capable of acting rationally in his or her own interest is central to economic theory on the one hand, and to custom, law, and "common-sense" thinking on the other. Economics offers a well worked-out account of how such a person would deal with choice, risk, and time. But casual observation and laboratory experiment agree that actual behavior deviates in systematic ways from that prescriptive model of rationality. Moreover, collections of individually rational actors do not necessarily act in ways that are rational for the group. Public policies need to take account of deviations between actual behavior and full rationality. (The essay immediately following this syllabus gives a fuller exposition of some of these ideas.)
Process and Goals
The course will:
*Develop some of the central concepts of the rational-choice model;
*Examine theories and evidence about the systematic ways in which actual
behavior deviates from that model;
*Explore the various reasons groups of rationally self-seeking individuals
might fail to act as rationally self-seeking groups; and
*Discuss some of the policy implications of individual and collective
departures from rational action.
Each class session will focus on a small cluster of concepts and one or two central ideas. The goal of the course will be to enable students to think critically and creatively using these ideas and concepts. The class process will be a mix of lecture and discussion, but with a focus on clarifying the concepts rather than arguing about them.
There will be a problem set for each class session, two hour exams and a final. The problem sets will involve using one or more concepts to analyze a situation, and defining in a phrase or sentence each “key concept” listed on the syllabus.
Problem sets are due at the beginning of class, or can be submitted by email anytime up to an hour before class. Late problem sets will not be accepted. Students are encouraged to work in groups on the problem sets, but each must submit a separate answer sheet.
Every Friday the TA will hold a mandatory, hour-long discussion section, which will focus on the problem sets and address any questions you have about the class material. You can also schedule individual appointments with the TA.
The hour exams will involve either defining the concepts or identifying which of them applies to a particular situation. The final will be a mix of question-forms. Each question will have a “right” answer.
Grades will be based 30% on the problem sets, 30% on the hour exams, 30% on the final, and 10% on your attendance to and participation in the discussion section.
Readings
There are three required texts:
Edith Stokey and Richard Zeckhauser, A Primer for Policy Analysis
Thomas Schelling, Choice and Consequence
Mancur Olsen, The Logic of Collective Action
Additional readings will be included in a Course Reader.
Schedule of Classes
PART I: RATIONAL CHOICE
Week 1
September 27: Choice and Preference
Week 2
September 30: The Present Value of Future Results: Discounting
October 2: Dominance, tradeoffs and opportunity cost
October 4: Valuing Uncertain Results I: Expected Value
Week 3
October 7: Valuing Uncertain Results II: Risk Aversion and
Certain Equivalent Values
October 9: Probability and Expected Value
October 11: Testing and Bayes’s Rule
Week 4
October 14: Deciding when to Test:
Integrating Bayes’s Rule with Decision Analysis
October 16: The Decision to Gather Information
October 18: Review
Take-home hour-long exam must be e-mailed to Prof. Kleiman by
Sunday at 11 pm.
PART II: SOCIAL AND MARKET INTERACTIONS
Week 5
October 21: The Pareto Criterion, Voting, and Condorcet’s Paradox
October 23: Game Theory and Prisoner’s Dilemma
October 25: Negotiation: Value Creation and Value Claiming
Week 6
October 28: Perfect Markets, External Costs, and Commons Problems
October 30: Public Goods and Collective Action
November 1: Relational Goods and Social Capital
Week 7
November 4: Micromotives and Tipping
November 6: Risk Spreading and Insurance
November 8: Asymmetric Information and the “Market for Lemons”
Week 8
November 11: Veteran’s Day Holiday: No Class
November 13: Market Signaling, Credentials, and Reputational Externalities
November 15: Self-censorship and Political Correctness
Take-home hour-long exam must be e-mailed to Prof. Kleiman by
Sunday at 11 pm. Review will take place during discussion section on Friday, November 15.
PART III: LIMITATIONS AND DEFECTS IN DECISION-MAKING
Week 9
November 18: Temporal Myopia
November 20: Prospect Theory
November 22: Cognitive Dissonance
Week 10
November 25: Self-Command
November 27: Pleasure, Comfort, and the Hedonic Treadmill
November 29: Thanksgiving Holiday: No Class
Week 11
December 2: Conspicuous Consumption and Luxury Fever
December 4: Economics of Happiness
December 6: Review
Rational Policies Toward Imperfectly Rational Behavior
Fall 2002
Instructor: Mark A.R. Kleiman
Office: Public Policy Building 6319
Phone: (310) 206-3234
Email: kleiman@ucla.edu, MARKleiman@aol.com
TA: Karolina N. Saloun
Phone: (310) 825-6148
Email: kaza@ucla.edu, karonic@aol.com
Classroom: 1246 Public Policy Building
Monday/Wednesday/Friday 11:30-12:20PM
Discussion Section: Room 1246, Friday 1:00-2:00 PM
_________________
Central Idea of the Course
The idea of an individual capable of acting rationally in his or her own interest is central to economic theory on the one hand, and to custom, law, and "common-sense" thinking on the other. Economics offers a well worked-out account of how such a person would deal with choice, risk, and time. But casual observation and laboratory experiment agree that actual behavior deviates in systematic ways from that prescriptive model of rationality. Moreover, collections of individually rational actors do not necessarily act in ways that are rational for the group. Public policies need to take account of deviations between actual behavior and full rationality. (The essay immediately following this syllabus gives a fuller exposition of some of these ideas.)
Process and Goals
The course will:
*Develop some of the central concepts of the rational-choice model;
*Examine theories and evidence about the systematic ways in which actual
behavior deviates from that model;
*Explore the various reasons groups of rationally self-seeking individuals
might fail to act as rationally self-seeking groups; and
*Discuss some of the policy implications of individual and collective
departures from rational action.
Each class session will focus on a small cluster of concepts and one or two central ideas. The goal of the course will be to enable students to think critically and creatively using these ideas and concepts. The class process will be a mix of lecture and discussion, but with a focus on clarifying the concepts rather than arguing about them.
There will be a problem set for each class session, two hour exams and a final. The problem sets will involve using one or more concepts to analyze a situation, and defining in a phrase or sentence each “key concept” listed on the syllabus.
Problem sets are due at the beginning of class, or can be submitted by email anytime up to an hour before class. Late problem sets will not be accepted. Students are encouraged to work in groups on the problem sets, but each must submit a separate answer sheet.
Every Friday the TA will hold a mandatory, hour-long discussion section, which will focus on the problem sets and address any questions you have about the class material. You can also schedule individual appointments with the TA.
The hour exams will involve either defining the concepts or identifying which of them applies to a particular situation. The final will be a mix of question-forms. Each question will have a “right” answer.
Grades will be based 30% on the problem sets, 30% on the hour exams, 30% on the final, and 10% on your attendance to and participation in the discussion section.
Readings
There are three required texts:
Edith Stokey and Richard Zeckhauser, A Primer for Policy Analysis
Thomas Schelling, Choice and Consequence
Mancur Olsen, The Logic of Collective Action
Additional readings will be included in a Course Reader.
Schedule of Classes
PART I: RATIONAL CHOICE
Week 1
September 27: Choice and Preference
Week 2
September 30: The Present Value of Future Results: Discounting
October 2: Dominance, tradeoffs and opportunity cost
October 4: Valuing Uncertain Results I: Expected Value
Week 3
October 7: Valuing Uncertain Results II: Risk Aversion and
Certain Equivalent Values
October 9: Probability and Expected Value
October 11: Testing and Bayes’s Rule
Week 4
October 14: Deciding when to Test:
Integrating Bayes’s Rule with Decision Analysis
October 16: The Decision to Gather Information
October 18: Review
Take-home hour-long exam must be e-mailed to Prof. Kleiman by
Sunday at 11 pm.
PART II: SOCIAL AND MARKET INTERACTIONS
Week 5
October 21: The Pareto Criterion, Voting, and Condorcet’s Paradox
October 23: Game Theory and Prisoner’s Dilemma
October 25: Negotiation: Value Creation and Value Claiming
Week 6
October 28: Perfect Markets, External Costs, and Commons Problems
October 30: Public Goods and Collective Action
November 1: Relational Goods and Social Capital
Week 7
November 4: Micromotives and Tipping
November 6: Risk Spreading and Insurance
November 8: Asymmetric Information and the “Market for Lemons”
Week 8
November 11: Veteran’s Day Holiday: No Class
November 13: Market Signaling, Credentials, and Reputational Externalities
November 15: Self-censorship and Political Correctness
Take-home hour-long exam must be e-mailed to Prof. Kleiman by
Sunday at 11 pm. Review will take place during discussion section on Friday, November 15.
PART III: LIMITATIONS AND DEFECTS IN DECISION-MAKING
Week 9
November 18: Temporal Myopia
November 20: Prospect Theory
November 22: Cognitive Dissonance
Week 10
November 25: Self-Command
November 27: Pleasure, Comfort, and the Hedonic Treadmill
November 29: Thanksgiving Holiday: No Class
Week 11
December 2: Conspicuous Consumption and Luxury Fever
December 4: Economics of Happiness
December 6: Review
posted by Mark Kleiman at
9/18/2002 03:51:00 PM
