Monday, October 12, 2015

Examples for Essay Question on Midterm 1

Imperfect Monitoring

  • BP and Gulf Oil Spill
  • GM and faulty ignitions
  • Performance Enhancing Drugs and Pro Athletes
  • Exxon and Global Warming
  • StarKist (see previous post)
  • Procurement Example I did in class - WebCT Vista and Illiniois Compass
  • New President of U Iowa falsifying his resume
  • Concealed emails on Salaita matter
  • Black Sox Scandal
  • Bernie Madoff
Lack of alternative suppliers - local monopoly
  • Drug prices for patented drugs particularly those that treat life threatening illness. 
  • Strikes, such as by teacher unions
  • Cost overruns and project delays among defense contractors
Lack of alternative buyers - local monopsony
  • Amazon - employees put in extremely long hours and are very competitive with one another.  
  • Walmart - pays employees little, poor benefits.  
  • Apple Computers - squeezes parts suppliers.
Coordination Problems
Pure Coordination 
  • Technology Services (Campus) provides Illinois Compass.  ATLAS (LAS) provides Moodle.
  • MLB - American League has the designated hitter.  National League has the pitcher bat. 
  • Statistics taught on campus - from the Stat Department or the Academic Department.
  • Macs or Windows computers in the workplace (and in the classroom). 
  • Databases - Oracle or SQL (Microsoft)
Prisoner's Dilemma
  • How Markets Fail by John Cassidy - Do banks pursue a strategy of making only safe loans at low interest rates or pursue a strategy of also making risky loans at high interest rates?
  • The Ratings Agencies - Standard and Poors, Moodys - can they deliver low ratings to companies that pay them for their ratings? 
  • Grade Inflation
  • Doctors ordering unnecessary procedures to self-insure again malpractice.  (This one also has an element of pure coordination in it, in that really sick patients see multiple doctors who don't necessarily communicate with one another.)

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