Student Misconceptions or Employer Pessimism?

This survey indicates a lack of rational expectations in the labor market for new grads.  The results themselves are interesting.  But one wonders why they are so strong.  What gives?

Study finds big gaps between student and employer perceptions @insidehighered via kwout

A Discussion Group - Follow Up

There were enough takers that this will happen.  Our first meeting time is the Thursday (1/8) at 10 AM in BIF.  This is NOT the regular meeting time.  That has yet to be determined.  It is a time that works because classes are not in session.

If you are interested in joining us, please do.  In that case, I would appreciate it if you would let me know ahead of time, either by a comment to this post or by emailing me.

Thanks.

Something for Next Semester - A Discussion Group*

If there is interest I would like to start a weekly discussion group in the spring on the general theme of taking the long view on your learning - things members of the group might try to have a greater take away from both the academic side and the intellectual part of the recreational side of undergraduate life.   It would also be a place for group members to drive the discussion, talk about issues they are having and have the group weigh in on how to think it through.  In some sense it is meant as a face to face alternative to the blogging you have done this semester.  

We know each other a bit now from our class so we shouldn't need to spend much time breaking the ice.  The group would be a bit of an experiment on whether outside of a course setting coaching qua thinking "it" through (whatever it is) can be effective for participants.  I've not done a discussion group with students like this before.  I tried this last year, but didn't get any takers.  Truthfully, this probably would be more useful for juniors (or sophomores) than for seniors.  The seniors are too close to getting out of here to benefit from this sort of thing.  Of course, if you are a senior and you're interested, I certainly wouldn't stop you.  

In my ideal we'd block off  an hour once a week.   Size-wise I'd hope for 4 or 5 students. That's about the max where if everyone shows each can participate vigorously in the conversation.  Less would be okay but make the group more vulnerable to no shows.  If more are interested I'd want to accommodate that, but it would move the group closer to a classroom setting and then the participation issue would creep in.  

If you are interested you can indicate that via a comment to this post.  That might encourage others to do likewise.  Alternatively, if you'd rather be the follower than the leader, you can send me an email to indicate your interest.  

Thanks for your attention.  

Final Grades in Moodle and Banner

I've posted the course grades.

Final Exam Results

The exams are now graded.  It may take still an hour or more for me to post the grades.  I want to do that with some care and make sure there aren't clerical errors.  What follows are some comments about the exam itself.

Question 1 was the essay question on the first midterm.  So you had seen it before.  Question 3 was on the final from last year and we reviewed it on the last day of class.  Question 2 was new for you.  It was there, in part, to see what you would do with it.  The means on questions 1 and 3 were right about at 81 (out of 100).  The mean on question 2, was just below 70.  I will talk about question 2 below.

One of the things I found interesting is that the vast majority of students accepted the premise of the question without requiring further definition.  Let's consider possible ways to further define the issues.   I'll begin with this rather famous quote from Thomas Edison.

I haven't failed.  I've just found 10,000 ways that won't work.  

So one issue is that invention takes time and one might be "in process" for quite a while.  How does the time component get managed?  Do we look for success after a fixed time window or let the process play out?  Nobody talked about that.

Another issue is whether the invention is fundamentally new for the entire industry or if instead it is something that has been tried elsewhere but is new for this particular organization.  In the literature on diffusion of innovation, there typically is a difference made between an innovator, on the one hand, and an early adopter, on the other.  Each engage in risks but of a different sort.

Then there might be an issue of whether the innovations themselves could be larger or smaller and hence if the reward or punishment varied, either absolutely or relatively, as a consequence.  People didn't take on that issue much at all.

I'll do one more of these and stop, but know that this list could be expanded without too much difficulty.  There is the question of how innovation translates into productivity and profitability for the firm.  There is a notion called leverage, which in this context means small changes that have big positive impact.  There is a recent book by Atul Gawande called The Checklist Manifesto, where he argues that implementing checklists for procedures that have some complexity to them (his particular interest is in avoiding medical problems during surgery) is a good way to achieve leverage.  In other words, people already know what good practice is, but because they exercise discretion they may deviate from good practice.  The checklists are a way to get people to stick with what works.  In contrast, an article I suggested you read argued for discretion and that overly prescribing procedures would reduce medical success.  So there isn't universal agreement about standardizing procedures being a good thing.

On the incentives themselves, very few people addressed the following question:  What, if anything, happens to the baseline compensation?  Does it stay fixed or does it get adjusted as well?  For our class, that would have been a natural question to ask.  It speaks to the question of whether the employees earn rents or not (in the case of rewarding innovation) or if the punishment is credible (when the punishment is in place for the case where innovation doesn't occur).  A few students recognized that the employee can quit, which limits the size of the possible punishment.

Then one might have asked whether two employees who are in the same job, with similar seniority and with both trying hard to innovate, might nonetheless experience that one succeeds and the other does not - what would the consequences be?  A few people said the reward scheme would make the employees competitive with one another, but I didn't understand that.  That they'd regard it as unfair, however, seems natural to me.  We talked in class about fairness specifically in the context of Akerlof's Gift Exchange model.  Nobody tied these incentives schemes to that, but it stands to reason that if either the reward or punishment scheme were implemented that it would result in less gift giving activity in the organization.

Finally, on other mechanisms, a few students offered up interesting ideas here, but only a few.  One of those is professional development activities (more education) for employees, where promoting innovation is part and parcel of the professional development.  Another is to look for symbolic/cultural ways at work to promote innovation.  Just to show what I mean here, I mentioned in class that I attended something that at the time was called the Frye Leadership Institute. (Frye is somebody's surname, and the institute was named after him.)  A few years ago they rebranded the institute and now it is called the Leading Change Institute.  In other words, innovation is now in the name of the thing.  Symbolic and cultural means are something we discussed but didn't hammer on in class, because they are not economics.  But they can matter.  B&D make that point repeatedly.  It is one of their four frames.

Grades Updated In Moodle

I have done the grade update that now allocates all the points except for the final exam.  Included were 20 points for the remaining Excel (one entry for the Shapiro-Stiglitz model, another entry called Freebie that everyone received), 50 points for Comments on blog posts, and 125 points for Blog Posts Second Half.  With the last there was also some text feedback to accompany the grade.  And I updated the individual blog posts to track your submissions.  Note that I never did enter the submission for the IlliniBucks post, but that has been accounted for already in the Blogs Posts First Half.

I also made a grade distribution of the all the points allocated.  It too can be found in Moodle.  It is a file called All But Final.

So you should know where you stand.

(Students doing Extra Credit projects, those points have yet to be allocated.  I will do that over the weekend.)

Last Year's Final Exam

Final Exam fall 2013

The final this time around will be in the same format.  I haven't written it yet and probably won't till after class on Thursday.

A couple of pieces on Medicine and moral hazard

This is from today's Op-Ed page.  It is called How Medical Care Is Being Corrupted.  The issue is how doctors are compensated and if that impacts how they practice - prescribe medications, recommend treatments, etc.

This other one is about medical research, particularly the war on cancer.  It is called Grant System Leads Cancer Researchers to Play It Safe. It is quite intriguing and might give you an entirely different sense of what moral hazard means.

Excel Homework Due Dec 3 at 11 PM

This is the last Excel Homework.

This homework is on extensions of the basic Shapiro and Stiglitz model, with a particular focus on making the monitoring intensity a choice variable.

You should watch the video presentation of the basic model first.   This is a full lecture on the math of the model.  It takes about a half hour.

xlsx file

Please Read This Essay Before...

...
1) You write the blog post due 11/21 on personal reputations, and
2) Also before class on Thursday 11/20.

The essay has a bit of math that I hope is easy to follow and has quite a bit of discussion of reputational mechanisms as means of enforcing good behavior.  I think you'll like the discussion and I hope it makes sense to you.

The essay was revised last year.  It matched that class quite well.  I originally wrote it for an intermediate micro class I taught in spring 2011.  (Aren't you glad you didn't take 302 from me?) We've done a few things differently this time around but there is still enough there that should fit what we've done.