Excel Homework Due December 1 at 11 PM

This is the last Excel Homework.

This homework is on extensions of the basic Shapiro and Stiglitz model, with a particular focus on making the monitoring intensity a choice variable.

You should watch the video presentation of the basic model first.   This is a full lecture on the math of the model.  It takes about a half hour.  (If you want the PowerPoint file, a link to it is in the description of the video.)

xlsx file

Excel Homework Due 11/3 at 11 PM

This homework is on the simplest possible version of the principal-agent model.  It is this model that produces pay for performance as a feature.  It is important to understand this base model before we delve into various realistic ways of complicating the model.  (Mostly we will talk about that but I might do some additional modeling in class after going over the basic model.)  There is a video I'd like you to watch first.  It should give you the background you need to do the homework.

Video
Excel File

Excel Homework Due 10/27 at 11 PM.

The homework is on bargaining.  Note that M&R have a discussion of bargaining in Chapter 5.  You should read that.  The model they go through has both the buyer and seller having two types.  In the Excel homework, the model has a continuum of types on each side of the bargain.  In that sense it is harder but also more elegant.  And, I believe, it should give you a better understanding about the relationship between the private information and the inefficiency  created.

There is a fiction in the model that helps to understand what is going on.  The fiction is that there is a third party - an arbitrator - who provides rules for how the bargaining will happen, when trade will occur, and at what price.  The fiction is necessary because the model is static.  Real world negotiations happen over time and to model that correctly one needs a dynamic model.  There are such models, but they are well beyond the scope of our class.  So we will keep the modeling relatively simple and wave our hands about what happens in real world bargaining.

There is a rather extensive discussion in this homework before you log in.  I encourage you to read that carefully and not gloss over it.  It is about how to bargain well and what happens in real-world procurement, which entails a good deal of such bargaining.  There are practical lessons here that you can carry over to your work life, even if you don't engage in procurement.

Excel Homework Due 10/20 at 11 PM

This one you should find interesting.  It is on insurance under private information.  A person could be a low risk (low probability of loss) or a high risk (high probability of loss) but there are no distinguishing features that lets the insurance company know which type an individual is.  The individuals know which type they are, but if low risk types get better rates then both types have incentive to claim they are low risk.  The market must somehow address this incentive problem.

Excel Homework Due Tuesday 10/13 at 11 PM

This is the homework on the Math of Risk and Risk Preference.   While you might be able to grind through it without viewing the content in the previous post, my expectation is that you will have done so.  It will greatly increase your understanding of what is going on.

Also, if you are an eager beaver in the crowd and do the homework before class next Monday (I applaud the eager beavers in the class) note that when you get to line 86 of the spreadsheet it says we have covered these ideas in class already.  We should get to those ideas on Monday, if only briefly.

Tips for Excel Homework Due Tuesday Evening

Please remember to use cell references when entering parameter values.  You will save yourself a lot of time that way, even if it is a bit of effort to identify the appropriate cell to use.  Also, remember to use the Split menu item which is in the Window menu.  You can delete the left right split by double clicking on that bar and you move the up down split to a position that is most useful for you.  You do this by dragging on the bar.  You should do this to keep the parameters you need in plain view and/or to be able to see the graph and fill in the answer to the next question at the same time.   Otherwise, you will find yourself scrolling up and down repeatedly and that can be annoying. If you scroll in one pane but leave the other pane fixed, that is the best approach.

I would not watch this movie below till after you have finished the Excel Homework.  It works through the algebra that is behind the graphs and explains the quality choice part in greater depth.  I will not do this in class, because I've learned the extensive algebraic derivations tend to stupefy the students and their eyes glaze over.  But you should watch this eventually and see if you can work through the algebra yourself.  One advantage of the video is that you can stop it at any point to do some calculations with pencil and paper to test your own understanding.  If you have questions about the video, please post them here as a comment.

Excel Homework on Coordination Failure and Coordination Mechanisms.

This homework is about coordination failure and coordination mechanisms. The last two worksheets coincide with material from M&R. Chapter 2 pages 43 - end of chapter on the medical intern matching program.  And all of Chapter 3.  Transfer pricing starts on page 79.

The homework is due next Tuesday evening 9/22 at 11 PM.

If you have a question about the homework, please post it as a comment to this post.

Excel Homework on the Efficiency Principle

Created by	prof.arvan@gmail.com
Description	This is a deeper look at the Efficiency Principle from taking a strategic approach. Note that this content is not in Chapter 2 of M&R. We are covering it, because it fills in a logical gap to the approach. Excel File: https://uofi.box.com/s/a7llt3qozlev902qaeg5zpee88upuvi6

If you have a question about this homework, please post it as a comment to the post here.  

Efficiency and Equity Concepts

For some of you this homework will be entirely review.  For others, you may not have seen the Edgeworth Box before.  I'd appreciate learning which is your situation by mentioning it in the comments when you submit your key.

As with the other Excel Homework, this one is due in a week at 11 PM.  And if you have a question about the substance of what is going on, please post that as a comment to this post.

Excel Tutorial

The message below is a repeat of the calendar entry about this homework, which is due 9/1 at 11 PM. If you have questions about how to do the homework, you can pose that as comments to this post.

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This is the first homework, though it really is a preparation for the future Excel homework that you will do.  This one is meant to teach you how to go about doing them, even if you are not very comfortable with Excel.

Go to the link below.  Then click the download button that is in the bar above the preview pane.  Save the file somewhere on your computer where you can find it later.

If you have questions about the content of this homework, please post those as a comment to those post.  I will try to respond within 24 hours.  Other students in the class should also feel free to respond.

Note that you get 10 points for completing the homework AND SUBMITTING your key to the Web form that is linked in the homework.

https://uofi.box.com/s/qn2mt6rk6kmsphicj66sup8p72qswygf