Social and Behavioral Sciences Commons^™

Teaching Economics Interactively: A Cannibal's Dinner Party, Ted Bergstrom

Ted C Bergstrom

This paper describes techniques that I use to teach economics principles "interactively". These techniques include classroom experiments and classroom clickers. The paper describes an experiment on market entry and gives examples of applications of classroom clickers. Clicker applications include the collection data about student preferences that can be used to construct demand curves and supply curves. Check on students' knowledge of central concepts. Play interactive games that illustrate economic concepts.

How Often Do Economists Self-Archive?, Ted Bergstrom, Rosemarie Lavaty

Ted C Bergstrom

To answer the question of the paper's title, we looked at the tables of contents from two recent issues of 33 economics journals and attempted to find a freely available online version of each article. We found that about 90 percent of articles in the most-cited economics journals and about 50 percent of articles in less-cited journals are available. We conduct a similar exercise for political science and find that only about 30 percent of the articles are freely available. The paper reports a regression analysis of the effects of author and article characteristics on likelihood of posing and it …

Rationality And Personality In A Restaurant Entry Game: Is There An Entrepreneurial Personality Type?, Ted Bergstrom, Jon Sonstelie

Ted C Bergstrom

Students in a large principles class participated in a market experiment in which they had opportunities to take entrepreneurial action. These students had also taken the Meyers-Briggs personality test. We explore the relation between personality characteristics and participation decisions.

Experimental Markets And Chamberlin's Excess Trading Conjecture, Ted Bergstrom

Ted C Bergstrom

Edward Chamberlin conjectured that the number of trades in realistic trading systems is likely to exceed that predicted by competitive equilibrium theory. He supported this conjecture by data from a large number of classroom experiments and with a plausible argument based on a numerical example. This paper states and proves a theorem that supports and illuminates Chamberlin's intuition, supplies examples of trading processes that lead to excess trading, and presents some additional experimental evidence.

The Costs And Benefits Of Library Site Licenses To Academic Journals, Ted Bergstrom, Carl Bergstrom

Ted C Bergstrom

Scientific publishing is rapidly shifting from a paper-based system to one of predominantly electronic distribution, in which universities purchase site licenses for online access to journal contents. Will these changes necessarily benefit the scientific community? By using basic microeconomics and elementary statistical theory, we address this question and find a surprising answer. If a journal is priced to maximize the publisher s profits, scholars on average are likely to be worse off when universities purchase site licenses than they would be if access were by individual subscriptions only. However, site licenses are not always disadvantageous. Journals issued by professional societies …

When Non-Transitive Relations Take Maxima And Competitive Equilibria Can't Be Beat, Ted Bergstrom

Ted C Bergstrom

The paper generalizes theorems of Ky Fan and Hugo Sonnenschein on the existence of maximal elements for non-transitive relations. I used these results to show that a binary relation could be constructed whose maximal element must be a competitive equilibrium. Thus proving the existence of competitive equilibrium under somewhat more general conditions than had been done previously. In 1975, I thought this was a useful extension of the Gale Mas Collel existence theorem. Journal referees then didn't agree with me, so I let it ripen in my desk for 15 years. I still think it is worth looking at if …

Vernon Smith's Insomnia And The Dawn Of Economics As Experimental Science, Ted Bergstrom

Ted C Bergstrom

A retrospective on Vernon Smith's contributions to experimental economics, written for the Scandinavian Journal of Economics.

The Iron Law Of Selfishness: Response To A Comment By Alexander Field, Ted Bergstrom

Ted C Bergstrom

Alexander Field was not convinced of a result that I claimed in my JEP 2001 paper that in "haystack models" with non-assortative mating, if the number of descendants of founding group members is determined by an n-player prisoners' dilemma game, then the population will converge to a population of defectors. He thought that the result applied only if the groups were large. I respond with a more detailed discussion and show how the result works even when groups have only two members.

Evolution Of Social Behavior: Individual And Group Selection, Ted Bergstrom

Ted C Bergstrom

How selfish does our evolutionary history suggest that humans will be? We explore models in which groups are formed and dissolved and where reproduction of individuals is determined by their payoffs in a game played within groups. If groups are formed ``randomly'' and reproductive success of group founders is determined by a multi-person prisoners' dilemma game, then selfish behavior will prevail over maximization of group payoffs. However, interesting models exist in which ``group selection'' sustains cooperative behavior. Forces that support cooperative behavior include assortative matching in groups, group longevity, and punishment-based group norms.

Storage For Good Times And Bad: Of Rats And Men, Ted Bergstrom

Ted C Bergstrom

How do rats and squirrels decide how much to hoard for the winter when they do not know how long the winter will be? This paper argues that natural selection is likely to result in random differences in the attitudes toward systemic risk by genetically identical individuals.

Economics In A Family Way, Ted Bergstrom

Ted C Bergstrom

This paper is an advertisement for some facts and ideas that I think likely to lead to a richer theory of the economics of the family. The discussion references many papers from anthropology and biology. Because of the intimate connection between the family and reproduction, it should not be surprising that there is much to be learned about the economics of the family from the study of evolutionary biology. Given the increased prevalence in recent decades of unwed parenthood, divorce with sequential monogamy, and ``non-traditional'' family arrangements, it seems that anthropological studies of alternative family structures would help us to …

Income Prospects And Age At Marriage, Ted Bergstrom, Bob Schoeni

Ted C Bergstrom

In an earlier paper Courtship as a Waiting Game, Mark Bagnoli and I proposed a theory that explained why it is the case that in almost every society and at almost all recorded times, the average age at marriage of men exceeds that of women. An additional prediction of this model was that men who married later in life would turn out to have higher incomes when they reach maturity than those who marry young. The current paper reviews this theory and tests it with U.S. data. Consistent with our theory, we find that there is a strong positive relationship …

The Political Economy Of Subsidized Day Care, Ted Bergstrom, Soren Blomquist

Ted C Bergstrom

This paper presents a theoretical model of political support for public provision of day care. In an economy where there are high taxes on wage income, selfish taxpayers with no children in the day care system may favor substantial public subsidies to day care because such subsidies induce mothers to join the labor force and hence pay income tax. Our model makes explicit quantitative predictions of the relation between the distribution of wages, theincome tax rate, and the subsidy rate for day care that maximizes net tax revenue from parents of small children. Applying parameter values from Sweden and the …

On The Evolution Of Altruistic Ethical Rules For Siblings, Ted Bergstrom

Ted C Bergstrom

This paper explores the evolutionary foundations of altruism among siblings and extends biologists' kin-selection theory to a richer class of games between relatives. It shows that a population will resist invasion by dominant mutant genes if individuals maximize a "semi-Kantian" utility function in games with their siblings. It is shown that a population that resists invasion by dominant mutants may be invaded by recessive mutants. Conditions are found under which a population resists invasion by dominant and also by recessive mutants. (JEL C70, D10, D63)

Primogeniture, Monogamy, And Reproductive Success In A Stratified Society, Ted Bergstrom

Ted C Bergstrom

This paper explores the workings of stratified societies in which there is primogeniture and where the nobility practice monogamous marriage with a double standard of sexual fidelity. We model a simple stratified society and define the reproductive values of the male and female nobility relative to that of commoners. We then explore implications of the hypothesis that preferences have evolved to favor maximization of reproductive value. The hypothesis is tested against fragmentary data from ancient civilizations and quite detailed information about the British aristocracy in the seventeenth and eighteenth centuries.

On The Economics Of Polygyny, Ted Bergstrom

Ted C Bergstrom

About 80% of all societies recorded by anthropologists are polygynous (men have many wives). Even our own society is less monogamous than claimed. This paper attempts to explain such mysteries as why bride prices and dowries are not ``opposites'', why polygamous societies are usually characterized by positive bride prices and dowry is mainly confined to monogamous societies, why polyandry (women having multiple husbands) is rare, but not extinct, and why the more you have to pay for a wife the better you will treat her.

How Altruism Can Prevail In An Evolutionary Environment, Ted Bergstrom, Oded Stark

Ted C Bergstrom

This paper considers a series of examples in which evolution supports cooperative behavior in single-shot prisoners' dilemma. Examples include genetic inheritance for asexual siblings and for sexual diploid siblings. We also study two models of ``cultural inheritance''; one in which siblings copy either their parents or an extrafamilial role model and one in which neighbors arrayed along a circular road copy successful neighbors. Finally, we consider a model in which parents choose their behavior, realizing that it may be imitated by their children. A unifying principle of these models is that cooperative behavior more is likely to be sustained in …

Courtship As A Waiting Game, Ted Bergstrom, Mark Bagnoli

Ted C Bergstrom

In most times and places, women on average, marry older men. We suggest a partial explanation. If the economic roles of males are more specialized than those of females, the desirability of a female as a mate may become evident at an earlier age than is the case for males. Males with good prospects will wait until their economic success is revealed before choosing a bride. Those with poor prospects try to marry young. In equilibrium, the most desirable young females choose successful older males. The less desirable young females have no better option than to marry available young males.

A Fresh Look At The Rotten Kid Theorem, Ted Bergstrom

Ted C Bergstrom

Gary Becker's ``Rotten Kid Theorem'' asserts that if all family members receive gifts of money income from a benevolent household member, then even if the household head does not precommit to an incentive plan for family members, it will be in the interest of selfish family members to maximize total family income. We show by examples that the Rotten Kid theorem is not true without assuming transferable utility. We find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a Rotten Kid Theorem. While restrictive, these conditions …

The Effects Of Cohort Size On Marriage Markets In Twentieth Century Sweden, Ted Bergstrom, David Lam

Ted C Bergstrom

Large, short-run fluctuations in the birth rate have been an important demographic feature of industrialized, low-fertility populations in the twentieth century. Since females normally marry men who are two or three years older than themselves, these fluctuations result in large imbalances between the size of male and female cohorts who would normally marry each other. These imbalances must somehow be resolved, either by a change in traditional patterns of age at marriage or by changes in the proportions of the population of one sex or the other who ever marry.

Following a suggestion of Becker (1974,1981), we have developed a …

Love And Spaghetti, The Opportunity Cost Of Virtue, Ted Bergstrom

Ted C Bergstrom

This paper was written in the form of two puzzles. One puzzle concerns Romeo and Juliet who love spaghetti and each other. They wear flimsy clothing and have abdominal hedonimeters. The other puzzle asks who benefits from tax deductions to the rich for charitable deductions.

Recovering Event Histories By Cubic Spline Interpolation, Ted Bergstrom, David Lam

Ted C Bergstrom

If event histories are recorded in discrete intervals of times, errors are introduced when the data are converted from the unit in which they were recorded, such as date, to another unit such as age or duration. The problem is illustrated by the inconsistent age at marriage schedules published by two recent U.S. censuses. This paper develops a general method for fixing problems of this kind by using cubic spline interpolation. We use the method to adjust U.S. age at marriage data, thus resolving a large proportion of the discrepancy between 1960 and 1970 censuses.

Soldiers Of Fortune, Ted Bergstrom

Ted C Bergstrom

This paper shows that if workers have identical wealths, abilities, and preferences then a draft lottery is Pareto superior to a voluntary army. It also shows that if being a civilian is a "normal good", then the optimal pay schedule will be such that people prefer not being chosen for the army. The paper shows how this idea extends to occupational choice in general and shows that pure gambles taken prior to occupational choice can substitute for lotteries that determine one's occupation. This paper repairs what I think is a major flaw in standard general equilibrium theory, which assumes away …

On The Private Provision Of Public Goods, Ted Bergstrom, Hal Varian, Larry Blume

Ted C Bergstrom

We consider a general model of the non-cooperative provision of a public good. Under very weak assumptions there will always exist a unique Nash equilibrium in our model. A smallredistribution of wealth among the contributing consumers will not change the equilibrium amount of the public good. However, larger redistributions of wealth will change the set of contributors and thereby change the equilibrium provision of the public good. We are able to characterize the properties and the comparative statics of the equilibrium in a quite complete way and to analyze the extent to which government provision of a public good ‘crowds …

When Do Market Games Have Transferable Utility?, Ted Bergstrom, Hal Varian

Ted C Bergstrom

A question with a nice clean answer. When do market games have transferable utility? Subject to some regularity conditions, the answer is if and only if indirect utility can be represented in the Gorman polar form.

Independence Of Allocative Efficiency From Distribution In The Theory Of Public Goods, Ted Bergstrom, Richard Cornes

Ted C Bergstrom

When is the Pareto optimal amount of public goods independent of income distribution? Subject to some regularity conditions, the answer is when preferences of every individual i can be represented by a utility function of the form U(X_i,Y)=A(Y)X_i+B_i(Y) where X_i is i's consumption of private goods and Y is the amount of public goods.

Can Courtship Be Cheatproof?, Ted Bergstrom, Richard Manning

Ted C Bergstrom

In 1983, I told Richard Manning about Gale and Shapley's beautiful 1962 paper on matching. He asked whether in the Gale-Shapley it was in the interest of all participants to tell the truth. We rather quickly showed that in general it is not in the interest of the recipients of offers to be truthful. In fact we were able to show that no mechanism can guarantee efficient assignments and be cheatproof. We were very pleased. We sent it to a journal, only to learn that Al Roth had beat us to it in a paper that was to appear in …

Counting Groves-Ledyard Equilibria Via Degree Theory, Ted Bergstrom, Carl Simon, Charles Titus

Ted C Bergstrom

A Nash equilibria of the Groves-Ledyard mechanism is Pareto optimal. But this may not be much use if there are many distinct Nash equilibria, since it is not clear that the mechanism would converge on any one of them. This paper shows that if preferences are quasi-linear, the Groves-Ledyard mechanism has a unique Nash equilibrium, but even in the simplest class of preferences in which demands for public goods are affected by incomes, the number of equilibria increases exponentially with the number of consumers. The paper makes use of some pretty mathematics and even sports a drawing of Whitney's umbrella.

When Is A Man's Life Worth More Than His Human Capital?, Ted Bergstrom

Ted C Bergstrom

This paper develops a "subjectivist" theory of the value that individuals place on risks to their lives. It explains the paradox that although individuals may view their lives as priceless, they still will take small risks for a finite amount of money. Typical public projects that alter risks to life result in small changes in survival probability for a large number of people. Standard tools of benefit cost can therefore be applied, where statistical lives saved are valued at a price equal to the marginal rate of substitution between survival probability and wealth. This "value" is compared to human capital …

Gorman And Musgrave Are Dual: An Antipodean Theorem On Public Goods, Ted Bergstrom, Richard Cornes

Ted C Bergstrom

This paper finds the conditions under which an allocation branch can determine the efficient amount of public goods to produce, independently of the distribution of private goods. The result is similar to that found in our Econometrica paper, but uses a quite different method--solving a differential equation.