When teams request public funding for new stadiums, they often do so with the threat of relocating to a city that is eager for a team. These credible threats must be without a team (either never having one or recently lost one) and are willing to put up the money to support a team. With a credible threat in place, host cities are often left with the option of paying large public subsidies.
Northwestern University unveiled one of the first dynamic pricing models for college sports in 2014. Students can reserve seats for upcoming sporting events and if prices fall to lower prices because of low demand, anyone who paid higher prices would be refunded. This incentive was meant to encourage students to reserve their seats early for big games. The two also introduce a Dutch Auction for tickets where students can set their reserve price and if they fall within the window then they’ll be assigned tickets.
In the re-boot of Prison Break, we look at how game theory impacts the decisions made by Michael Scofield. It starts with the idea that players in the game are focused on self-interest even when it comes at the expense of other players in the game. The setup is described as a one-shot game where players focus on themselves with no future implications.
I’m teaching an Economics of Crime course soon so I’ve been on the look out for great clips related to cheating. I think my current plan is to have a series of goofy examples of cheating. In this Ted Talk, Dan Ariely discusses some of the research from his books on honesty by describing the idea of irrationality related to honesty. The rational model of crime first flushed out by Gary Becker assumed that criminals performed a cost-benefit analysis for cheating and would only cheat if the expected benefits outweighed the costs of being caught. Ariely brings the behavioral aspect of economics into play with his discussion on the nuances around decision making, even in criminal enterprises.
Sheldon isn’t a fan of traditional rock, paper, scissors so he introduces a new variant of the game with two more options, which increases the number of possible outcomes. The guys decide to use RPSLS to solve their disagreements, but they seem to struggle with the notion of needing to have mixed strategies. While Spock is not a dominant strategy in this game, the others don’t seem to comprehend ways to beat the throw.
For more Big Bang Theory clips, check out Bazinganomics!
In behavioral economics we begin to study why people procrastinate. If you are teaching Time inconsistency either in your behavioral section of microeconomics or in a full class on behavioral economics, this is a nice short clip to motivate discussion.
This clip and reference come from James Tierney!
MIT Professor, Micky Rosa (played by Kevin Spacey) challenges Ben with the Monty Hall problem of selecting a door with a prize hidden behind it. The Monty Hall Problem is based on a statistics brain teaser that insists the optimal choice is to switch your decision after the host reveals what’s behind one of the doors.
The national championship of the Rock, Paper, Scissors League was filmed in the mid-2000s in Las Vegas, Nevada. The announcers walk through the variety of strategies that players consider during the game and whether each method is valid. As a simultaneous game, RPS is taught that players should randomize, but professional players try to outsmart their competition.
Here’s a neat AI program to play RPS in your class.
Time inconsistency is one of those economic topics that is quite easy to have a basic understanding of but quite difficult to understand full models that employ it. This video can be used as a lead in during a behavioral economics course or a microeconomics course that touches on behavioral economics.
Thanks to James Tierney for the clip and description