A League of Their Own

 

Dottie decides to quit right before the World Series, and her coach isn’t too happy about it. One of the most salient topics taught in a section on behavioral economics is the idea of ignoring sunk costs. When things get boring or tough, a rational agent may decide to quit. Dugan believes that baseball is a great separating equilibrium and that it shows who’s tough and who isn’t. If baseball were an easy game then the it wouldn’t be a beneficial signal to everyone watching.

Thanks to Jose Fernandez for the reference!

Apollo 13 — Failure is Not an Option

The crew of Apollo 13 is stuck in orbit around the moon and the NASA crew on the ground is trying to figure out how to get the astronauts home alive. Faced with only the tools in space and a limited time window, the engineers must use every available item at their disposal to maximize the amount of time before reentry to Earth’s atmosphere. This clip is a nice introduction to the idea of consumer choice, budget constraints, and utility maximization. All resources must be used in the model and their is no value to saving anything. The goal is to earn as much utility as possible given the budget constraint. The same issue faced the NASA engineers: they had to use all available resources, there was no benefit to saving items for next time, and they had to maximize the time/oxygen/energy for the astronauts.

You’ve Got Mail — Monopolistic Competition

 

Struggling children’s bookstore owner¬†Kathleen Kelly (Meg Ryan) tries to remain positive as a big retail chain bookstore, Fox Books, opens around the corner. She outlines the differences between their products and services and notes how this could be a good thing for her business. When business try to differentiate their products, they are often operating in a monopolistically competitive environment. The one issue with the entrance of a new competitor in these markets is that it decreases demand for the other firms even if they are a little different. The accountant notes that their revenues are down compared to the same week last year.

The Terminal — Quarters for Carts

 

In The Terminal,¬†Viktor Navorski (Tom Hanks) is trapped in JFK airport when his visa is no longer valid because his country entered into a civil war. Stranded inside JFK, he has to figure out how to eat and sleep while his political situation is resolved. He quickly realizes that many people aren’t returning the luggage carts even though there is a 25 cent “reward.” He begins collecting carts around the airport in order to buy Burger King meals.

Forrest Gump — Only Boat Left

 

Forrest easily enters the shrimp market by buying a boat. There are multiple buyers and sellers, and no one shrimping boat controls the price of shrimp. Therefore the shrimp market is an example of perfect competition. Once the hurricane hits it forces all the other boats to exit the market. Turning the market into a monopoly. Forrest is the sole supplier of the product, controlling the entire market, turning it into a monopoly.

Thanks for the clip and summary Keagan Rallis

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