COMM 620: Fall 2011 Seminar in Communication Using Theory to Craft Policies to Affect Change [Working draft] Class day/time: Thursdays, 9-11:50 a.m. Classroom: KER202 Instructors: Professor Lian Jian Professor Jonathan Aronson Office: ASC 227A Office: KER206 E-Mail: [email protected] E-mail: [email protected] Phone: 213 740-0439 Phone: 213 743-1943 Office hours: By appointment Office hours: By appointment Course Description: This seminar reviews path-breaking ideas suggested by, mostly, Nobel Prize winning economists. It then examines specific cases, trying to understand the process by which markets and institutions transform these ideas into results. There will be six couplets where we will focus on theory and ideas in the first week and how these ideas were translated into practical results in the second week. Course policies: Use of computer in the classroom is a privilege. You may use a computer in the classroom for taking notes or for checking the Internet to augment class discussion in real time. Please do not check your email or surf the Web for non-class related. (We will be watching!) Please turn off all other electronic devices (cell phones, MP3 players, etc.) during class. Due dates are indicated on the syllabus. You are expected to meet these deadlines. Exceptions will be allowed only if agreed upon by the instructors in advance or in the event of a tsunami or other natural disaster striking LA in the two days before class. Lateness will be penalized in your final grade. Course Requirements: A research paper or project is due and will be presented the last day of class. (40%) The topics will be negotiated with the instructors. A two-page proposal is cue in class on September 29th. (10%) PhD students are encouraged to develop a paper for their research project that, after revision, might be published in a scholarly journal or serve as a basis for their dissertation. 1 | Page Each of you will also be required write a 4-8 page policy memo that focuses on one economists writings and its ultimate implications for the real-world policy (20%), to lead or help lead a discussion based on the readings in class (15%), and to participate in class discussion. (15%). One extra credit assignment worth 5% is available. For the policy memo, imagine you are a visiting academic fellow in the office of a high- level business, government, or NGO official. You will need to specify the company or agency, and country. Your boss is overwhelmed by day-to-day decisions and does not have time to read and reflect on the ideas in the academic literature. She has asked you to write her a memo that (1) identifies a real or likely decision that she may soon be faced with, (2) reviews the ideas of one or two Nobel economists whose ideas may provide insight to the looming decision, and (3) recommend a course of action based on the economic insights. We see the research paper/project as something that should be a steppingstone and not an end product. Doctoral students could focus on producing a paper that they could present at a conference and eventually publish. Or, they could use this project as an exercise/opportunity to develop a dissertation prospectus that you might want to pursue after you pass your qualifying exams. Students who do not see their future in academia or research may wish to develop a “White Paper” or other project that showcases their skills and could be shared with potential employers. In either case, we will work with you individually to develop a project that fits with your interests and goals. Grading: Assignment Value Due Date Paper/Project Proposal 10% September 29 Policy Memo 20% October 27 Discussion Section Lead 15% As Assigned Class Participation 15% Throughout Final Paper/Project 40% December 1 Extra Credit 5% September 8 You May Wish to Purchase North, Douglas. (1990). Institutions, Institutional Change and Economic Performance, Cambridge University Press. Stiglitz, Joseph. (2002). Globalization and Its Discontents, Norton. 2 | Page Yunis, Mohammed (2003). Banker to the Poor: Micro-Lending and the Battle Against World Poverty; Public Affairs, Academic Accommodations/Statement for Students with Disabilities If you have a recognized disability, we will work with you to make accommodations. You will need to register with Disability Services and Programs (DPS) and obtain a letter of verification for approved accommodations for us, from them by the fourth week of class. DPS is located in STU 301 and is open 8.30 a.m. to 5 p.m. Monday through Friday. The DSP phone number is 213.740.0776. If the pressure grows and you are feeling overwhelmed, talk to us, but also contact the USC Student Counseling Services office at 213-740-7711. The free service is confidential. Plagiarism/Academic Integrity: We encourage you to form study groups and will consider group projects, but the Annenberg School for Communication is committed to maintaining the highest standards of ethical conduct and academic excellence. Plagiarism, fabrication, or purchasing papers will be dealt with harshly and may result in you dismissal from Annenberg and USC. (Ironically, if policymakers plagiarize your ideas or prose they will not credit you, but we will) In addition to the formal academic integrity policy, our pedagogical policy is based on mutual respect; all students are encouraged to use the classroom as a space in which to speak and to voice their opinions. Our expectation is that you will respect not only the professors but also your fellow classmates when they are participating in discussion. WEEKLY TOPICS AND READINGS Week 1: (8/25): Introduction to class, syllabus, expectations and goals Guest speaker: Annenberg Professor Thomas Goodnight Before class please read: Stigler, George J. “Does Economics Have a Useful Past?” History of Political Economy, September 1, 1969; 1: 217-230. Levitt, Steven D. and Stephen Dubner (2005). Freakonomics, William Morrow, pp. 3-15 and if possible 117-144. Watch: Amartya Sen speaks on "The Uses and Abuses of Adam Smith" at Duke University as part of a celebration weekend of the 40th anniversary of the History of Political Economy Journal. Available at: http://www.youtube.com/watch?v=TUPAIdK126s 3 | Page Couplet 1: Economic History, Institutions, and Change Week 2: (9/1): Theory: Economic History and Economics of Information: Readings: Coase, Ronald. (1937). “The Nature of the Firm,” Economica, 4(16), 386–405. North, Douglass. (1991). “Institutions,” The Journal of Economic Perspectives, 5(1), 97–112. North, Douglas. (1990). Institutions, Institutional Change and Economic Performance, Cambridge University Press, pp. 3-104. Hayek, Friedrich A. (1945). The use of knowledge in society. American Economic Review, 35(4), 519-30. Vane, Howard and Chris Mulhearn (2005) The Nobel Memorial Laureates in Economics, Edward Elgar. (V&M). Bios for Stigler (1982), Coase (1991), North (1993), and Hayek (1974) . (These will be distributed in advance.) For the mathematically inclined: Stigler, George. (1961). The Economics of Information. The Journal of Political Economy, 69(3), 213-25. Week 3: (9/8): Applications: Prediction markets and Internet search Extra Credit Opportunity: Correctly predict the winner(s) of the 2011 Nobel Prize in Economics. Submit you predictions before the prizewinner is named. Readings: Please watch: Douglas North - Effect of Institutions on Market Performance at FCC. Available at: http://www.youtube.com/watch?v=A2xhmlpUKd8 Brynjolfsson, Erik and Michael D Smith. (2000). Frictionless commerce? A comparison of Internet and conventional retailers. Management Science, 46(4), 563-85. Wolfers, Justin and Eric Zitzewitz. (2003). The furor over “terrorism futures.”. The Washington Post. Available at: http://bpp.wharton.upenn.edu/jwolfers/Press/TerrorismFutures.pdf 4 | Page Wolfers, Justin and Eric Zitzewitz. (2009). Using markets to inform policy: The case of the Iraq war. Economica, 76, 225-50. Please visit these online prediction markets: Hollywood Stock Exchange: http://www.hsx.com/ and Intrade: http://intrade.com Couplet 2: Game Theory and Mechanism Design Week 4: (9/15): Theory: Game theory and mechanism design Readings: Dutta, Prajit K. (1999). Strategies and Games: theory and practice. MIT Press, Ch. 1, 2, 3, 5, and 20. Chapter 1: A first look at the applications Chapter 2: A first look at the theory Chapter 3: Strategic form games and dominant strategies Chapter 5: Nash equilibrium Chapter 20: Games with incomplete information “Von Neumann’s Games” and Nash’s Equilibrium”, Chapter 2 and 3 in Siegfried, Tom (2006), A Beautiful Math: John Nash, Game Theory and the Modern Quest for a Code of Nature, Joseph Henry Press, pp. 27-72. Hurwicz, Leonid. (1945). The Theory of Economic Behavior, American Economic Review, 35(5), 909– 925. V&M Bios of Harsanyi (1994) and Nash (1994) For the Mathematically Inclined Harsanyi, John. (1962). Bargaining in ignorance of the opponent's utility function. Journal of Conflict. Resolution, vol. 6, pp. 29-38. Myerson, Roger B. (2008). "Mechanism design." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, The New Palgrave Dictionary of Economics Online. 5 | Page Week 5: (9/22): Applications: Spectrum auctions, school choices, and kidney exchange Invited guest speaker: Simon Wilkie, USC Department of Economics Readings: Please watch: Akerlof-Critique of Neo-Classical Macroeconomics Part 1; http://www.youtube.com/watch?v=EO8lwTjtca0&feature=related Kwerel, Evan (March 11, 2004), Market Mechanisms for Redeveloping Spectrum,” Presentation at Harvard, ppt. Schelling, Thomas. (1978). Micromotives and Macrobehavior, Norton, pp. 9-43. Schelling, Thomas. (1960). Elements of a Theory of Strategy. The Strategy of Conflict, Oxford, pp. 3-80. Roth, AlvinE. (2008). What Have We Learned from Market Design? The Economic Journal, 118(March), 285-310. For the Mathematically Inclined Milgrom, Paul.