Monday, February 25, 2008
No winner this week. According to Browning and Zupan (1999; p187), the difference is due to the size of the hockey rinks. "Not all hockey rinks are the same size. Harvard's rink is large and this serves to increase the marginal product of speedy versus brawny players--there is more room to play a fast-paced version of hockey. By contrast, Yale's rink is smaller and thereby favors brawn over speed. Since there is less room to run, it becomes easier for large players to hunt down smaller opposition and beat it to a pulp." Indeed, Harvard even keeps their rink much cooler than Yale's so that the ice is faster to skate on, thereby benefiting their players.
Monday, February 18, 2008
Monday, February 11, 2008
"The price of corn is very low this year, and the most I can get from the crop is $55,000. If I paid you the same amount as I paid you last year ($50,000), I'd lose money, because I also have to worry about the $30,000 I paid three months ago for seed and fertilizer. I'd be crazy to pay a total of $80,000 to harvest a crop I can sell for only $55,000. If you are willing to work for half as much as last year ($25,000), my total cost will be $55,000, so I'll break even. If you don't take a pay cut, I won't harvest the wheat."
Is the farmer bluffing, or will the farmworkers lose their jobs if they reject the proposed pay cut? Explain.
Congratulations to Yang Di for providing the first, complete, answer to the above dilemma. Read the comments section to see Di's reasoning.
Monday, February 4, 2008
Congratulations to Lang Zhao for correctly identifying that Edward Chamberlin of Harvard University conducted the first recorded market experiment in 1948. A participant in that experiment was Vernon Smith, who later went on to win a Nobel Prize in Economics for helping to pioneer a new branch of economic analysis known as experimental economics.