Swollen Breasts And Cramping

games in class, Vernon Smith and I

NB: Vernon Smith incredulously watching the market equilibrium during a class game

Each year we are doing here in the good old Faculty of Economics, a course of re-entry during which first year students of economics and AES (Economic and Social Administration) are introduced methods and learning issues of the economy. There are now three years, we proposed that all students pass through our laboratory experimental economics, the LABEX to enter teaching economics in a gentle and fun through participation in a game computer market. It is not nothing, because in two weeks, about 600 students participate in these sessions, the duration of the meeting of two hours. However, all those who have taught know just how challenging it is to expose the main basics of microeconomics to a beginning student. So, there are two categories of teachers. Those who think we should do it seriously and it's sometimes a little difficult because you have to constantly juggle between abstraction and empirical, giving concrete examples regularly. It is a difficult path, and it is not sure students eventually convinced and enlightened. There is another way, easier, those who satirize the unrealistic nature of assumptions relating to the functioning of a market of perfect competition and conclude that the probability of reaching equilibrium in this market is dependent on the intervention of a higher power that is not of this world.
I caricature a bit to do a bit of provocation, because it can also be convinced that this ignores the perfectly competitive market is a pure hoax. When I started my studies in economics, about twenty years ago, it Instead, the second philosophy was adopted.

[I was blown ear that some university teachers perpetrating this kind of talk, but hey, rumors ...]

I really think the games in class, whoever they are, help break the deadlock teaching (I do not want to put on a scientific or ideological, this post talks about a simple problem which is that of learning but fun nonetheless rigorous by students). The huge interest from my point of view of the games in class is that it reverses the order which is traditionally courses, especially in economics. It first outlines the main principles and applications are given. It is no coincidence that the lessons are structured in lectures and tutorials, sessions in which we apply the theory presented in the course. With the economy through learning games, you start at the opposite of a fun and empirically by exposing students in a specific situation in which everyone has to make decisions, then ex post analysis results (which is a real challenge because the teacher does not really know what he will ultimately leave the game) and finally the teacher tries to disentangle the facts adduced in the game with theoretical considerations. In short, the procedure is exactly contrary to the traditional way of teaching, at least in economics. Better to quote directly Vernon Smith about this:

"In the Autumn semester, 1955, I Taught Principles of Economics, and found it a challenge to Convey Basic Microeconomic Theory to Student. Why / How Could Any Approximate market has competitive equilibrium? I resolved That On The First Day Of THE FOLLOWING semester class, i would try running a market experiment That Would Give The Students Opportunity to experience year year actual market, and Opportunity to me the one observed in Which I Knew, goal THEY DID not Know What Were The Alleged driving conditions of supply and demand'm his market ".

In fact, Smith said he himself was skeptical about the chances he had initially obtain a competitive market equilibrium, and he was taken aback by the results, the shock melting the principles of its personal scientific revolution.

game market made a first-year license is directly inspired by the double auction game invented by Vernon Smith in the 50s. Although this game is extremely experienced, I 'll drive, do you give the recipe in case you want to decorate your long evenings with friends to a game of a genre a bit special (this game may well be done on paper, but the completion times are then much more long). At the beginning of the meeting, we explain to twenty participants (in reality, they are usually about thirty, but some play to two per machine, which poses no real problem) they will be divided into ten vendors and ten buyers who buy or sell the same goods in a market. To do this, the market will open for a certain period (say average 2 minutes), during which time they can buy or sell 0, 1 or 2 properties. Quotations of each agent are displayed in real time on the screen of each participant and posted transactions actually carried out (the price at which each unit has been bought and sold is displayed in a window). For example, a seller computer interface looks like this (application developed by ZTree, a free software originally developed by Urs Fischbacher University of Zurich):

All buyers and sellers obtain private information, namely the experimental values of redemption (which are actually available to pay or net surplus of assets purchased since the experimenter pays the buyer the difference between the redemption value and the price paid by the purchaser for a given unit) and production costs. All buyers are different from each other, as well as sellers. For example, the values for buyers are in our application:

The strength of the game is that buyers and sellers do not know the characteristics of other participants. The only information that is common to all of the purchase price offered by buyers and the price offered for sale by vendors. Therefore, on paper, it seems highly unlikely that these participants are rapidly mixed to coordinate on the market equilibrium theory. The theoretical prediction for the market equilibrium is easy to do since it is the experimenter (teacher) who sets out in exogenous preferences of buyers and sellers of production technologies. The balance is provided which can be characterized for instance, in the first phase of the game played by students, for quantities of 18 units exchanged for an equilibrium price between 5 and $ 6 experimental:

The game involves after 7 periods of market, a demand shock (the new economic situation prevailing during 6 periods), and finally a supply shock.
The results are spectacular, like those of Smith and those whenever this game is done, even if small variations curious can occur from one group to another. The range of theoretical equilibrium price is given in red on the chart below and the average price in blue, for a particular group of students:

The price equilibrium adjusts the shock whenever the teacher has generated in the market. It should be noted that this game is done under special conditions, without any kind of monetary incentive and, although we tell students not to talk and discuss them in what can sometimes look like from the outside to a big fair. Despite this, after the game, as they are presented with the results, most students I think are amazed by the level of coordination they have not managed to work together without being particularly special or looking maximum profit.

All games in class does not give the results of this type, it is sometimes enough to have infinitesimal changes in the rules of the game to get radically different results and that challenge question the theory. A point is important for anyone wishing to play games in class: the results are usually quite close to those obtained in the sessions of experimental economics, except in the case of games revolving around the individual decision at risk. In this category, it is important not to stay in the hypothetical consequences of the choices of students at the games. Personally, I pay them in candy based on points earned during the game!
In any case, this teaching approach has completely changed the way I taught and gave me a new motivation. I believe that in Overall, the students are extremely satisfied with this method.
Moral: make games in class, had paid ca, ca ca pay and pay ...

Condolence Quotes For Great Man

Leonardo Da Vinci or the anti-Adam Smith

(NB: Leonardo da Vinci - right on the photo in a memorable game with Adam Smith to the left - in which he tried to explain the principle of division of labor)

Staying in Tuscany recently, I am concerned, like many people in the same situation, to the exceptional history of Florence in particular during Renaissance and, more specifically to the artist who symbolizes perhaps the most this time, the intellectual influence of Florence and the concept of humanism, namely Leonardo di ser Piero da Vinci (Vinci is a small village in Tuscany where comes the great artist, at least this post you will learn if you do not know, drive).

Everything has been said, and probably a lot of stupid things too, on what was protean genius Leonardo and I'm not gonna do a biography, the reader, this is not my purpose, others being hagiographers probably much more knowledgeable than me. But the guy has always fascinated since childhood, if only for his exceptional talent for drawing, being a bit sensitive to this art, but because it brought together two characteristics that seem almost unattainable, that of being a brilliant artist but also be a scientist complete. All this is well known, but do not be impatient reader, I come to regard this central ticket.

Leonardo had almost all the qualities and talents all, but if there is no doubt one that it was probably lacking is the ability to complete the works he began, that in almost every area that approached. Anecdotally, Michelangelo, jealous to death of his elder, had also publicly mocked his inability to complete the monumental equestrian statue of Francesco Forza company in 1492 and never finished, while he had managed to complete his monumental David. Besides, if the artist had an unquestionable reputation, he had also, at least in Florence, the reputation of never finish what he undertook.

In fact, this inability to finish was not the product of any laziness - The man was a workaholic - or exacerbated dilettantism, but because it seemed to make everything himself, beyond the technical knowledge of his time, in every stage of a project it was implementing. Should he make a mural, it was just as interested in the composition and preliminary studies that support it, such as a wall. If the wall seemed deficient, he studied at length the ways to solve problems, while interested in different chemical or physical processes which diverted length the main object. Many projects were undertaken as unfinished. Leonardo is still the absolute figure of Engineering course - painter, sculptor, musician, architect, engineer, designer, anatomist, (al) chemist, do not throw more! especially when we know he was self-taught -. But, and this is the gist of my post, it remains the perfect symbol of humanism, there is a real paradox in that we still dream of what might have been complete if had agreed to specialize, particularly in the purely artistic (where its contribution to I think the painting is the least doubt). Indeed, this difficulty to specialize in certain tasks, dramatically reducing what is left today of his work.

The spirit and work of Leonardo indeed radically opposed to the principle of division of labor and specialization originally put forward by Adam Smith and Ricardo, this principle is to increase opportunities for exchange One source of capitalist development and our material wealth.

Friedrich Engels had also noted that too, in the Dialectic Nature , speaking more generally of the great geniuses of the Renaissance:

"The heroes of That Time sept yet in thrall to The Division of Labor, The effects of restricting Which, With icts production of one-sidedness, weekends so Often In Their Successors record. "

This question is one that we all posed at one time or another. We usually some talents or interests outside the professional field, where most of the time, we do. Apart from any playfulness, our interest to exercise those talents for utility or otherwise to exercise fully the advantage comparison we have in a domain? The concept of opportunity cost is there to show us that, in fact, it is desirable that we exercise in the area where we have the greatest comparative advantage. So Leonardo would have to stick to painting and use the greatest engineers and architects of his time by delegating to complete the projects it was implementing in the areas where its comparative advantage was smaller than in painting . Any undergraduate student of economics knows and understands this.

Leonardo's case is obviously to be set apart as we speak probably the genius of geniuses, but what about people more "normal" like you and me? Can we stay long in the "error" - magnificent in the case of Leonardo, not to understand the benefits of specialization in an exchange?

The question is therefore whether economic agents spontaneously discover the virtues of specialization and exchange as they were developed by Adam Smith and David Ricardo. That's pretty much about the subject of the experiment performed by S. Crockett, V. Smith and Bart Wilson, whose results were published in the Economic Journal in 2009. I'll try to summarize the main results and give an intuition of experience which is actually quite complex.

In their experiment, participants have preferences exogenous consumption possibilities (there are two consumer goods) and characteristics in terms of production technology (they can produce both consumer goods). There are two types of subjects, subjects having a similar type of preferences and production technologies differ from those of the other group, all subjects belonging to the same virtual village. Subjects unfamiliar not the distribution of types or preferences / technologies from other subjects. By cons if they know their preferences, their allocation of time, they do not always know their production technology (depending on treatments). Basically, participants in each period of play, first a choice of production and consumption choices. They can remain in autarky, or try to make exchanges with other participants, knowing that one of interest of this experiment is precisely that they must discover themselves it is possible to exchange and thus have interest to specialize. In other words, the institutional framework implemented in the laboratory is very flexible and does not push them towards the exchange and specialization. Why not inform the subjects that can be exchanged? They remind quoting Adam Smith himself: "As It Is The Power of Exchanging Which Gives Used To The division of labor, so The extents of this division in proportion Will Always Be To The Extent of That Power .."

Clearly, the process of exchange and division of labor, the two reinforcing processes must be discovered and validated by officers during a learning process in which everyone finds their interest. To implement this process of discovery, during the experiment, subjects can therefore communicate in a completely free, so that each seeking its own interest ultimately lead the community to its maximum efficiency (gain obtained with specialization and exchange is three times the gain that can get involved in autarky).

An example of the type of communication performed by the subjects, just for fun:

source: Crockett, Smith and Wilson 2009, p.1183

Experimental treatments consist mainly of varying the number of participants within a group and the level of information about its own production technology.

As always the results raise questions: in all processing, there is at least a few participants who remain in autarky and that never discovered (or refuse to learn) the virtues of trade and specialization. There are also participants who discover their comparative advantage and immediately implement it. Moreover, when participants exchange, especially in large groups, exchanges are not bilateral but multilateral.

But back to our discussion of specialization. Knowing that the Pareto optimum corresponds to 100% of participants who engaged in the production of both goods in which each has a comparative advantage (which they must eventually discover they do not know their production technology) The number of specialists (the subjects that affect at least 90% of their time staffing the business with a comparative advantage) is a general belief in time, during periods of repetition (There are forty) but varies greatly among treatments. On average it is 50%, but tends to be significantly lower when group size is large and production technologies are initially unknown when the group size is small and the primary technologies known by the participants.

The moral of all this is that it is not obvious to participate in the exchange and specialization, although it seems consistent with his interest and that people know it. As noted ultimately Crockett et al, 2009, experience proves that the exchange is a phenomenon before social whole and which has even more likely to occur and consolidation that we are in bilateral relations. So if Leonardo did not specialize, it may be that the granting of trust sparingly to his contemporaries, and he certainly had a fairly negative view of human nature ...