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.

Another Grade Upload in Moodle Done This Morning

There were grades upload for the last four Excel Homeworks and the last four Blog Posts.  Note that the blog post columns are just for tracking that you did them.  There are no points being allotted.  Moodle requires me in making the columns to assign some points, so each blog post column has 1 point assigned, but you are not receiving those points.  The points you receive for blogging are given in a block.  One block was done at mid semester, which you've already received.  The next block will be done at the end of the term, before the final.

A little celebration today

I bought the cider and doughnuts, so we are on for today.  I hope there isn't any precipitation when heading to class.

For Practice - Midterm 2 from last year

I wouldn't look at this till you've done the Excel Homework on the Principal-Agent Model.  But then, this Exam should be intelligible to you.    Also note, question 2 from last year's Midterm 1 is fair game as well.

In case you are not confused enough about the difference between conflict and an argument...

...this is pretty funny and should be part of your cultural repertoire.

Blog Post About Bargaining Homework/My Laptop

Here is the link to the post The Diffeq From Hell, which I wrote a couple of years ago.  I think it will be most beneficial to you to explain why you have this homework on Bargaining in the first place, and what economic insights the homework is supposed to provide.  You might also be amused by the history of the construction of the Arbitrator's rule, which is documented in that post.  Math-wise, this was the most difficult homework for me to make.  It is ironic that you found it much easier than the prior homework on Adverse Selection in Insurance markets, which may have been tougher for you but was far easier for me - from the point of view of the underlying math modeling.

* * * * *

For those who were in class today and watch me go into a panic attack as system 8.1 installed on my laptop while I wasn't paying attention, this just to let you know that when I got home it seemed it had actually installed correctly, unlike my two previous attempts where it crashed the computer and wouldn't allow it to reboot. So all is well on that score.

Here is wishing you an early Happy Halloween.  Good luck with the trick or treating, but don't eat too much candy if you are successful on that end.

Excel Homework Due Wed 11/5 at 11 PM

This homework is on the simplest possible version of the principal-agent model.  It is this model that produces pay for performance as a feature.  It is important to understand this base model before we delve into various realistic ways of complicating the model.  (Mostly we will talk about that but I might do some additional modeling in class after going over the basic model.)  There is a video I'd like you to watch first.  I should give you the background you need to do the homework.
Video
The actual homework.

Some follow up reading

During the first part of the class where we went over the blog posts and the possible reasons for why one might be charitable to others, I mentioned the book Excellent Sheep, which I'm currently reading. What I've read so far is not particularly uplifting, but you might find it interesting to shed light on your own circumstance.  The focus is on elite college students (think of the Ivy League) and the hoops they must jump through, how that effects them as learners and as human beings.  Outwardly creating the appearance of extraordinary competence, inwardly these students are quite miserable and full of doubt.  To the extent that you are just like the students characterized in this book, it provides an argument that all of you are deserving of empathy, from your peers and your teachers.

During the latter part of the class in discussing intrinsic motivation, I mentioned the concept known as Flow.  The link is to a book by that title.  With little effort, you should also be able to find a TED talk on the subject by the book's author, Mihaly Csikszentmihalyi.  It is my view that if you've learned that on occasion you can find Flow in what you do, and do so while engaged in an activity that brings some joy or value to others, then you're very close to finding your life's work.  And if you learned to do that while in college, then college was a very valuable time for you.

In my own reading, I read Flow after reading Daniel Kahneman's Thinking Fast and Slow.  I did that while teaching our course for the first time, when I only had 8 students and taught it as a seminar (but still there were attendance issues).  You might find this blog post I wrote at the time interesting as it tries to tie the various themes together.  I didn't check all the links in that post but I noticed the particular link to the bat and ball problem was broken, which is why I've provided an alternative here.