Ronald Coase Econ 490 fall 2017

My overall impression for the course is quite positive. Though this course is designed for undergraduate students, I still enjoy the class a lot. There are three parts that I want to talk about: assignments, class contents, and interactions. Firstly, assignments of this class are more than I expected, which is still fine for me. Blog posts every week are the most beneficial assignment in my opinion, which help me to digest what I learned from the class. Though writing blog is time consuming, since I have to think through the contents what I am going to discuss and which parts I want to focus on, I believe that is a good way for students to connect the new class contents to their old knowledge. Another gain for me is that I get a lot more chance to write essays and have feedback from Professor, which is a precious opportunity that I wouldn’t have from most graduate-degree courses. About the Excel homework, the difficulty is quite reasonable for me. Detailed instructions are provide...

Most of time, the tension between the agent and principal results from goal incongruence. The same reason causes problems in a triangle like principal-agent situation. Take my work experience two years ago in Colorado as an example, I was a crew leader who had to satisfy both my supervisors and my crew members. As I mentioned in the previous post, I attended the summer work and travel program and worked in a housekeeping department for three months. My job was to lead crew members to finish tasks that supervisors assigned. In that situation, my supervisors can be considered as the principal 1, and my crew members are considered as the principal 2. The principal 1’s goal is to finish cleaning cabins or lodge rooms as more as possible in the shortest time, and I am the agent who is supposed to help them finishing the goal. The principal 2’s goal is quite opposite to the principal 1’s goal, since most of housekeepers are international students who joined the program for fun and they ...

There are tons of cop movies. Some of them talk about the same thing: two partners paired up reluctantly, but end up helping each other and finish the mission. Such as Lethal Weapon (1987), Point Break (1991), Die Hard with a Vengeance (1995), Rush Hour (1998), Training Day (2001), Hot Fuzz (2007), 21 Jump Street (2012), 22 Jump Street (2014), Zootopia (2016) and even the incoming movie, Bright (2017). I don’t know whether people get tired of watching same plots in different cop movies again and again, at least I am still love watching cop movies. In those movies, most plots are like a disciplined officer needs to cooperate with another officer or civilian who is careless of rules. In the beginning, you can feel the tension between those two people since they are used to tackle tasks using their old methods. Conflicts occur often. However, their new challenge proves that old ways doesn’t work and they both need to learn something from their partner. To elaborate my illustrations, ...

The ideas discussed in the three articles are interesting, they are about how people share belongings, how people perceive fairness, and how people act altruistically. I believe that these ideas are not only important on observing human behaviors, but can also be handy when applying them in organizations. Before I continue the discussion of the articles, I want to talk something I learned about people’s “identity” in our course project and previous posts. According to the paper I read in preparation for the course project, Identity and the Economics of Organizations, Akerlof and Kranton (2005) assert that people’s identity could influence their behaviors, which I think is highly correlated with the topics of the three articles. There are normally two identities, one is “insider” and another one is “outsider”. Insiders are keen on achieve goals aligned with their social category. Outsiders, on the contrary, are more likely to act against insiders’ interests. Social category divides...

As I mentioned in the last few posts, a successful organization has to deal with goals, rules and participants. From the perspective of the organization, participants are one of uncertainties that the company can control with reasonable goals, well-defined rules. In short, good management can help companies to solve uncertainties in certain situations. What about individuals? How do a manager or an employee deal with uncertainties? In this post, I want to talk about what actions can an individual (me) take to lower uncertainties or risks. Based on the prompt given by Professor, the situation is that I am going to graduate and what will I do to reduce my uncertainty in job market. Let me begin from discussing my major, Economics, which is really not a risk-averse major. When I was going to graduate from my college, I talked to some of my professors that I’d like to purse my graduate degree so I can enhance my understanding of Economics and know more about how to apply economic know...

 A brief review to recap what I wrote previously. My first post is “Boot Camp Organization”, which is about my experience in Army and how Army could be related to organization operations. The second post, “Discussion About Opportunism”, is about how selfish person act to maximize their own profits regardless others, which may cause reduction on community’s welfare. “Knock Knock Housekeeping” is the third post talking about my experience as a crew leader in housekeeping department. The fourth post is about a hypothetical scenario which illustrates how the Illinibucks Program works. After reviewing those posts, I found it is quite easy to follow the logic. All posts have some relationships with organizations and discuss few critical components which companies should have. These components are goals, rules, and participants. I will explain them respectively below. Firstly, a good organization must have clear goals which are known by all managers or employees. In my first post...

Let’s say, the university has clear purposes on issuing Illinibucks. One goal could be solving unfair issues happened on campus, such as some undergraduate students spend four years trying to register for popular courses but still can’t get one. Also, the campus is running this Illinibucks program to bring students better academic experience instead of doing some weird things that normal universities wouldn’t do, such as holding football game one Friday or having unofficial St. Patrick Day on campus. The school realizes these problems are severe and makes its mind up to maximize students’ welfare prior to maximize its own profit. Without these proper purposes, there is no reason that the university wants to circulate Illinibucks, and students wouldn’t bother to give Illinibucks a try. Few problems that administrators want to solve by issuing Illinibucks. Firstly, administrators hope that limited course spots are taken by students who are most willing to take those courses. To solv...

I visited the United States for the very first time in the summer of 2014, not for travel but for work. There is program called J1 program or Summer Work and Travel program, which is specially designed for international students who are interested in American culture and willing to spend their summer working in America. So, I applied for the program, got few exams, passed few interviews, and flew to USA to work as a… housekeeper. The following three months I was working in a resort located in Colorado. The main duty of housekeepers is, no doubt, keeping houses clean. Unlike those housekeepers I usually saw in hotels who work alone with a housekeeping cart, housekeepers in our resort worked as teams. The supervisors of housekeeping department assigned team arrangements every morning. Each team had a crew leader and four to five crew members. Before I became a crew leader, I didn’t feel much about how a team operates, I just did my jobs that my crew leader assigned to me. Yet I beca...

The first idea come to my mind when I am thinking about opportunism is the tragedy of the commons. The tragedy is about how people’s act when limited common goods are provided; without proper regulations, people are tended to consume common goods as much as they can and waste up most of the resource. The common trait of being an opportunist and wasting common goods is that both are totally legal. You may not even feel bad if you are a person doesn’t care about moral ethics a lot. Even if that being an opportunism is not illegal, it does harm our communities or societies. Just like the tragedy that people spoil all common goods provided by the government. There was an example just happened few days ago in my class of game theory. Professor wanted to play an anonymous game with students, game rules are clearly given: all students can choose either 5 free points or 20 free points added to their next assignments; however, nobody gets free points if four or more students select 20 ...

It was the end of June 2014, I just graduated from college, feeling my bright future is awaiting me. Well… that sense of victory didn’t last too long. Three days later, I was on the bus which takes privates to the boot camp: it was the compulsory military service that every man in my country has to fulfill. That summer turned out to be the worst summer I’ve ever had. The boot camp was a 30-days orientation for new recruits. The squad leader showed us how their organization, Army, works, and rules were clearly given to us. Follow the rules then you are free from troubles; break the rules then not only you but all squad will be punished. Sounds fair enough to follow the rules, however, some privates were preferred to try some bold moves and we were punished consequently. That was the time I realized how people are insanely irrational in the real life. I bet those privates haven’t learned Economics before, not to mention prisoner’s dilemma of game theory. What we did was like a game ...

https://en.wikipedia.org/wiki/Ronald_Coase Ronald Harry Coase, born in 1910 and died in 2013, an English economist well known for his contribution to Institutional Economics. In fact, Coase wasn’t aiming to be an economist in the beginning of his academic life; He got his bachelor commerce degree when he attended the London School of Economics. In there, Coase was exposed to Economics for the very first time. His professor, Arnold Plant introduced Adam Smith’s invisible hand to Coase in a seminar. Professor Arnold showed Coase how a competitive economy uses pricing mechanism to achieve equilibrium. And it was the time Coase started thinking, what if the so-call invincible hand works so well, why there are abundant firms and organizations existing in markets? He wondered why don’t people just trade to each other as an independent. In 1931, Coase received Sir Ernest Cassel Travelling Scholarship and visited University of Chicago. During his exchange in the United States, he st...

Here we go!