ESOC 5200/7200 (VanSickle) -- Summer 2003 Readings

Most readings are (or soon will be) available through the UGA Library Reserve system. To access these readings: open up a new browser window, go to the UGA libraries page, click on GIL, click on Course Reserves, and locate "VanSickle" under Instructor. A password is needed; you will get it from Prof. VanSickle. On the Library Reserve page, find a specific reading by using the one- or two-word description in the "Find It" column below. Note that some readings are instead found using a direct link.

Number Find It Citation Comments
Readings on: The Economic Way of Thinking, Efficiency, Exchange, and Opportunity Cost
1 Car
"Economic Scene: The ins and outs of putting a price tag on product safety",
by Michael M. Weinstein.
New York Times,
August 12, 1999.
While the court case on which this article is based is now rather dated, the point made here is still very valuable. Installing every possible safety feature would not be a good idea, but it is equally wrong to say that no safety features are valuable. In the end, a judgment has to be made about which features should be installed (or, in this case, required). The only practical way to do that involves comparing the cost of a safety feature with a estimate of how many lives would be saved, and then with the "value" of saving a life (and that value isn't "infinite"). [Alternatively, you could think about trying to decide which of a number of potential safety improvements should be undertaken first.]
2 Valuing
"Life: The Cost-Benefit Analysis",
by John Tierney.
New York Times,
May 18, 2003.
If it is indeed true that making intelligent safety/regulatory decisions requires compaing alternatives -- and therefore requires that a value be assigned to a "life" -- how can such a value be computed?
3 direct link "University System of Georgia Enrollment"
USG web site.
Take a look at the graph (on the right-hand side) showing Fall enrollment in University System of Georgia schools. After enrollment remained essentially unchanged from 1993 to 2000, what happened in 2001 and 2002? How would you explain this pattern?
4 direct link "Enrollment Growth Soaring High"
by Ashlee Griggs.
Athens Banner-Herald,
January 28, 2003.
A classic example used to illustrate how to think about the "cost" of an activity employs the "cost" of attending college. In addition to explicit expenses like books and tuition, a significant fraction of the expense of college is the opportunity cost of a student's time -- in particular, the wage (salary) that the student could have earned had he or she chosen to work rather than to attend school. A quote in this article makes clear that part of the reason for the recent surge in college attendance is the slowdown in the U.S. economy. As the (expected) wage that can be earned by a 18-year-old falls, the (effective) cost of college also falls; as a result, enrollment rises.
5 Increasing
"Economic Scene: Employment and prosperity affect body inflation"
by Hal R. Varian.
New York Times,
September 26, 2002.
For this class, one key point to note is the change in the "opportunity cost" of exercise over the decades. As the column notes, changes in opportunity costs help to explain differences in behavior.
6 Super
"Economic Scene: Some lessons about Super Bowl ticket prices",
by Alan B. Krueger.
New York Times,
February 1, 2001.
Note Lesson 5 -- people seem to value implicit and explicit costs differently. In other words, they appear to value an opportunity cost (the amount of money they give up by choosing not to sell a ticket) differently than they value a cssh cost (the amount of money they would give up to buy a ticket). Even when the comparison is made more precise -- adjusting for changes in wealth -- many people still make seemingly inconsistent choices.
7 Penny
"Trying to Penny-Pinch for Dollars"
by Melinda Ligos.
New York Times,
February 4, 2003.
It's not a surprise to say that people respond to incentives. What makes this article interesting is its description of how some firms use this principle to hold down their costs -- and do so in a way that leaves their employees happier.
8 Panera "In the Lead: Panera CEO's Recipe: Learn From the Past, Anticipate Trends"
by Carol Hymowitz.
Wall Street Journal,
June 10, 2003.
In a (well-functioning) market system, a firm earns a profit by producing and selling a product or service that consumers value. The better a seller can satisfy consumer wants and desires, the more money the firm can make. The desire of a firm to earn a profit therefore gives it an incentive to improve the lives of its customers. In other words, a market system can take behavior that is motivated by pure self-interest and shape into activities that are in the best interest of the overall society (because they benefit both sellers and the buyers). [There are obviously lots of firms that can be used as practical examples of this principle; since Panera Bread has recently opened in Athens, it's a natural example for a UGA faculty member.]
9 Blizzard "The Big City: Good? No, But Greed Is Useful",
by John Tierney.
New York Times,
January 2, 2001.
This is also a well-written description of how consumers benefit from the incentives created by the profit motive.
Readings on: Demand, Substitutes and Complements, and Elasticity
10 Book
"Economic Scene: Things that every economist takes for granted could help a lot of other people avoid some costly mistakes",
by Virginia Postrel.
New York Times,
January 3, 2002.
A straightforward explanation of basic economic concepts -- like "demand curves slope down" -- made interesting by stories about the way in which some people seem to ignore them.
11 Ticket
"Economic Scene: Music sales slump, concert ticket costs jump and rock fans pay the price",
by Alan B. Krueger.
New York Times,
October 17, 2002.
Why popular artists didn't charge more for concert tickets in the past -- which allowed "scalpers" to make money by buying and reselling tickets -- has always been an interesting question. This article suggests that the old pricing system was based on a desire to increase the demand for albums (or CDs). Now, however, this pattern has been altered by the apparent fact that the CD market is shrinking (since an increasing number of people are downloading songs without paying for them). How does a decrease in the significance of the "complementary" good (CDs) affect the calculation of the optimal concert ticket price?
12 Sale
"Priced to Move: Retailers try to get leg up on markdowns with new software",
by Amy Merrick.
Wall Street Journal,
August 7, 2001.
Note first the explicit mention of "elasticity" in this article. Stores can now use huge amounts of data and sophisticated statistical techniques to measure (and predict) how price changes affect the quantity of a good sold. In turn, this information plays a role in determining what prices the firms charge.
13 Web
"Economic Scene: The usual decorous waltz between prices and sales becomes a lively tango in the world of internet sales",
by Hal R. Varian.
New York Times,
December 19, 2002.
Note first the data -- on price and quantity changes -- that would allow one to compute elasticities. In some cases, those elasticities are very, very large. Why might this be true? Also note that the demand elasticities seem to differ among firms, and consider the author's explanation of why that might be.
Readings on: Demand and Supply
14 direct link Pecan Production and Prices Supply movements -- caused by weather conditions -- affect market prices.
15 Wine
"Hitting the Bottle for Less: Grape Glut Pushes Down Prices of Some Fine Wines; Finding a Bargain Bordeaux",
by Christopher Lawton.
Wall Street Journal,
May 1, 2003.
Another example of a price change; in this case, a fall in the price of wine. Note that the article lists three causes for the price change -- "overplanting, a burst of new wineries, and economic recession". Which of these three is (are) a change in supply; which is (are) a change in demand?
16 New York
"Home Free: Some Rich and Famous of New York City Bask in Shelter of Rent Law",
by Laurie P. Cohen.
Wall Street Journal,
March 21, 1994.
This is a dated article, but it's on this list because it's such a classic example of the "unintended consequences" of interfering with a market outcome. New York City imposes rules to keep the rental rates of some apartments below what they would be otherwise. The rent-control laws -- presumably meant to "protect" consumers -- have had many unanticipated results: there appear to be fewer rental apartments in Manhatten than there otherwise would be, some of those that do exist are not well maintained, and there can be sizable non-monetary costs associated with trying to find a vacent apartment. Note also that the beneficiaries of the rent-control law are often not low-income renters.
Readings on: Competition, Price Searching, and Monopoly
17 Salad "Salad in Sealed Bags Isn't So Simple, It Seems",
by Amanda Hesser.
New York Times,
January 14, 2003.
On one level, note that this article describes many elements of our description of how a market functions over time -- innovation, an emphasis on lowering production costs, inroduction of new technology, entry of new firms, price competition, etc. On another level, this article reminds us of how remarkable are the market processes that bring products (often for remarkably low prices) to consumers.
18 Coffins "E-Commerce Report: Some Web merchants fill a void and, make a profit, by selling coffins and other funeral supplies online",
by Bob Tedeschi.
New York Times,
February 3, 2003.
The existing sellers (funeral homes) of a product (coffins) are charging (apparently) high prices; this creates a profit opportunity for a new entrant. Over time, what do we expect will happen to prices (maybe even those charged by the funeral homes)? Note the point that in some states only funeral directors are allowed to sell coffins. What might be the stated reasons for such a restriction? What might be the real reason for such a restriction?
19 Delta "Delta Gets Some Stiff Competition on a Key Route",
by Edward Wong.
New York Times,
May 28, 2003.
Another example of how the entry of a new firm into a market -- which increases competition -- can cause substantial reductions in the price charged by the incumbant firm.
20 Airplanes "In the Secret World Of Airplane Deals, One Battle Up Close",
by Daniel Michaels.
Wall Street Journal,
March 10, 2003.
Even in a market that has only two firms -- where you might expect collusion (cooperation) betheen the firms to be especially appealing -- there can be strong price competition. Note, as well, how sellers try to keep secret (both from their rival sellers and from future buyers) the price reductions they offer specific buyers. [Also, note that price competition may very well strengthen as market conditions get wrose (and sellers become more desperate for sales).] Remember, though, that firms don't always compete vigoriously on price -- remember the "coffins" story listed above.

[There's really no need to read every word of this (long) article.]
21 Auto
"Buying Jobs: How Big Incentives Won Alabama a Piece Of the Auto Industry",
by Rick Brooks.
Wall Street Journal,
April 3, 2002.
Governments also compete with each other. A state would gain more from an auto plant if it didn't offer the car company any tax breaks, but many state governments apparently feel a string incentive to offer incentives. Any agreement to "collude" and refrain from offering incentives would probably be violated. The high cost of the incentives that Alabama used to attract Mercedes (what was the estimated "cost" to the state per job?) makes some wonder whether a state that "wins" the bidding war to attract a new factory actually gains or not. As the article indicates, there can be disagreements about this. As is always the case, competition to attract customers is better news for the customers than for the entities doing the competing.
22 Savannah "Big push won DaimlerChrysler",
by Peralte C. Paul.
Atlanta Journal-
October 20, 2002.
Georgia now also participates in the "give-tax-breaks-to-attract-industry" game. Note the table illustrating how much states have offered in exchange for auto factories.
23 Wal-Mart "Lessons in Keeping Business Humming, Courtesy of Wal-Mart U."
by Virginia Postrel.
New York Times,
February 28, 2002.
Rises in productivity (motivated by the profit motive) -- even in seemingly "non-high-tech" markets such as retailing -- appear to play a big role in raising standards of living. This is yet another example of how the profit motive can lead to better outcomes for consumers.
24 Sports
"The Barry Bonds Tax: Teams Raise Prices for Good Games",
by Stefan Fatsis.
Wall Street Journal,
December 3, 2002.
Many companies in the airline, hotel, cruise, and other industries have been engaging in price differentiation -- charging different people different prices for essentially the same good -- for awhile. Now, an increasing number of sporting teams are doing the same. [Broadway shows are also pricing in this way.] This article explains which games (not surprisingly, it's games for which demand is stronger and less elastic) will cost more to see. Here's how the Atlanta Braves are differentiating prices (scroll down). How do they define "premium" games? [A marketing suggestion: in addition to raising prices for certain games, perhaps the Braves should have considered discounting other games.]
25 Argentina "Argentina Paying Heavily For Squandering Blessings",
by Larry Rohter.
New York Times,
February 8, 2002.
Is it true that "greed is good" (quoting from the movie Wall Street)? We've seen that in a market system, "greed" can be satisfied by producing (at relatively low cost) valuable products that people want to buy. That is indeed a good outcome. But "greed" need not always be channeled into such socially-beneficial activities. Consider Argentina. Even though the country has tremendous natural advantages, its economy has struggled over the past century; in 2001 and 2002 the crisis became severe. While several factors play a role in the recent situation, the longterm problems of Argentina show that it's only when an economic system has proper "social institutions" that private "greed" produces socially beneficial outcomes. Without those institutions -- whether in Argentina or the U.S. -- greed can manifest itself in (privately-profitable but) socially-harmful corruption and graft.
Readings on: Externalities and Public Goods
26 Stephen
"A Stephen King Online Horror Tale Turns Into a Mini-Disaster",
by David D. Kirkpatrick.
New York Times,
November 29, 2000.
An attempt to get readers to "voluntarily" (in effect) pay for downloaded book chapters resulted in a 46% payment rate. Questions: is that rate larger or smaller than you would have expected? If the "experiment" had continued, would you expect that rate to have risen or fallen over time?
27 Districts "Self-taxing districts gain traction",
by Janet Frankston.
Atlanta Journal-
January 13, 2003.
Community Improvement Districts are voted into place by the property owners in a certain area. An extra property tax is assessed, and the proceeds are used to fund designated projects in that area. In other words, this is a self-imposed tax. Why are people willing to vote for such programs? Is this s "good" tax? Why is the fund-raising mechanism made mandatory (a tax) rather than volunaty (contributions)?
[There's no need to read every word of this article.]
28 Schools "Arm-Twister's Guide to School Finance",
by Michael Winerip.
New York Times,
February 26, 2003.
After a court decision in Vermont lead to greater "sharing" of local property taxes, some communities decided to raise some money through "voluntary" payments rather than mandatory taxes (such payments wouldn't have to be "shared" with other communities). Voluntary payments, of course, raise the possibility of "free-riding" type behavior. The community tries (rather successfully) to overcome this incentive, but extensive social pressure is sometimes needed. Do you think it's easier to impose such social pressure in larger or in smaller communities?
29 Antibiotics "FDA Restricts Antibiotic Use In Livestock To Protect People",
by Scott Kilman.
Wall Street Journal,
September 12, 2002.
The current use of antibiotics in livestock is (arguably) an example of a situation in which individually-optimal behavior by one group (the farmers who feed antibiotics to their animals) may create a substantial external cost on others. What should be the government's role in a case like this?
30 Fish "Report: Predatory fish stocks decline",
by Andrew C. Revkin.
Atlanta Journal-Constitution,
May 15, 2003.
The over-harvesting of fish is a classic example of a "common-resource-pool problem" (sometimes called "the tragedy of the commons"). A single fishing boat has little reason to cut back on the number of fish that it catches -- if it doesn't catch some fish, a different boat most likely will. But if every boat catches as many fish as it can, the stock of fish may be drastically depleted (perhaps imparing the ability of the fish to reproduce). Attempts to maximize immediate profit can therefore cause substantial loses in the future. In such a situation, the pure "free-market outcome" can (due to externalities) be bad for everybody in the long run. It is likely that only some kind of social coordination (quite possibly imposed and enforced by government) will be able to reduce the amount of indiviudually-understandable but socially-harmful overfishing.
31 London "Starting Today, Driving in London Is Pound Foolish",
by Sarah Lyall.
New York Times,
February 17, 2003.
Driving a car on a congested road imposes a negative externality -- longer delays -- on other drivers. When people don't take the external costs of an activity into account, they undertake more than the efficient amount of that activity. One way to move the actual outcome closer to the efficient outcome is to impose a tax on the (negative-)externality-generating action. [And, perhaps, reduce some other tax in exchange.] In practice, imposing such taxes is sometimes a challenge. London is now imposing an (approximately) eight-dollar tax on drivers who enter a "congestion zone". [The technology developed to enforce the rule is quite interesting.] The proponents of the tax predict it will lead to a "25 percent reduction in traffic delays". There is, needless to say, considerable public opposition to the plan. [A follow-up story from April 15th -- available through the course reserves system as "London II" -- indicates that things seem to working pretty well, and there has been a definite drop in congestion. There have, of course, been some people who haven't paid.]
32 direct link "Property Is Theft: When protecting your own property is stealing from others",
by Steven E. Landsburg.,
August 3, 1997.
A negative externality exists when an action imposes a cost on somebody who is not directly involved with the activioty; in contrast, a positive externality exists when an action creates a benefit for somebody who is not directly connected with the activity. This essay is a cute contrast bewteen an auto-protection device that creates a positive externality (it helps reduce the chance that your neighbor's car will be stolen) in contrast to a device that creates a negative externality (it raises the chance your neighbor's car will be stolen). [It's not clear, however, that there are any really practical implications about desirable government policy.] BTW, LoJack is now available in Athens.
33 Garbage "Finding Surprises in the Garbage: 20's New York Was the Real Throwaway Society, Scientist Says",
by Kirk Johnson.
New York Times,
November 22, 2002.
This article is on the list partly because I think it's so darn interesting. The most significant economic point relates to this passage: "[t]he great trend of the 20th century ... hes been toward less garbage -- or at least lighter garbage -- because the economics demanded it and technology made it possible ... [t]he average plastic gallon milk jug, for example, is a third lighter than it was in the 1970's ..." When manufacturers and transporters use less material -- as in milk jugs or beer bottles (another example from the article) -- they create an environmental benefit. Does the clear environmental gain described in this article mean that we can rely on manufacturers to solve every environmental problem (with no government regulation)? If not, what distinguishes cases where firms will voluntarily make socially-beneficial choices from cases in which socially-beneficial outcomes will arise only due to government regulations?
34 Emissions
"U.S. Left Out of Emissions Trading",
by Otto Pohl.
New York Times,
April 10, 2003.
This article briefly summarizes a marketable-permit (pollution-control) trading system, and explains the incentives it gives some firms to cut back on pollution emissions by "more" than the required amount. Such a program -- by introducing market-like incentives -- should reduce the cost of meeting any given pollution-reduction goal. Note that the last couple paragraphs describe the U.S. program -- established by the Clean Air Act of 1990 -- to reduce sulphur dioxide emissions. This program seems to have worked well. IN general, it is commonly believed (often with good reason) that European countries are less comfortable with "market" procedures than is the U.S. In this case, however, a market-based system that the U.S. originally proposed (before dropping out of the Kyoto Protocal process) has been adopted by other countries. England's trading system is already in place, and the European Union's is planned to start in 2005. BTW, here's the web page of the company mentioned in the article. [Finally, note that the existence of a pollution-permit system doesn't by itself determine how much pollution should (or shouldn't) be reduced. What such a system should do is make it less expensive for an economy to reach any particular level of pollution reduction.]
Readings on: Markets and Government
35 Ice
"F.T.C. Moves to Stop $2.8 Billion Ice Cream Deal",
by Sherri Day.
New York Times,
March 5, 2003.
We know that the monopolization of a merket is a bad thing for both consumers and the economy as a whole. If the Federal Trade Commission determines that a proposed merger has the potential to reduce competition to such an extent that consumers would be hurt, it can go to court to stop the merger. The F.T.C. recently made that decision in the case of a proposed merger of two makers of "superpremium" ice cream. Note the comment of the F.T.C. administrator about possibility of entry into this market. Note also that some commentators vigorously disagreed with the F.T.C.'s decision, making (among others) the following two arguments. (i) Superpremium ice cream shouldn't be considered a distinct market, but part of the overall ice cream market, in which case the proposed merger would have a much smaller impact on market shares. (ii) If the merger did cause the prices of some kinds of ice cream to rise, new producers could (and presumably would) enter the market. Which side of this dispute seems to you to be more reasonable?
36 Chemicals "An Industry Under Constant Scrutiny",
by Paul Meller.
New York Times,
April 17, 2003.
In general, explicit price fixing is illegal in the U.S., as well as in the European Union. The chemical industry has been repeatedly investigated and fined for collusive behavior (both in the US and the EU). Note the speculation about why these firms have repeatedly (allegedly) colluded -- the industry is made up of a small number of firms, and those firms have unusually close ties with each other.
37 Southwest "Quick! Name a Company that Merits Accolades"
by David Leonhardt.
News York Times,
January 5, 2003.
Government regulation of firms has not always served to protect consumers. In some industries -- airlines and trucking are classic examples -- it apeared that the government regulators were more concerned with protecting the profits earned by the industry's incumbant firms. Deregulation allowed new companies to enter the U.S. airline market; the resulting increased competition has led to a fall in the price of airplane tickets. [It has also produced a fall in the level of service and comfort, as airlines began to compete on price rather than on service quality.] The most successful post-deregulation entrant into the airline industry is Southwest. Even today, markets that are served by Southwest have lower ticket prices than do markets in which the company does not operate. On a related note, points out (second item) that some lingering effects of regulation are still relevant today. The current problems of United (and other) airlines is partly due to a pay-scale system that was first established when airlines were regulated (so that the "major" carriers didn't face competition from "low-cost" airlines).
38 Steel
"Errant Shot? So Far, Steel Tariffs Do Little Of What President Envisioned",
by Neil King, Jr.
and Robert Guy Matthews.
Wall Street Journal,
September 13, 2002.
In 2002, the U.S. imposed import tariffs on many varieties of steel. This article describes some of the results: higher costs for U.S. firms that use steel, more protectionary rules adopted by other countries, and complaints that the U.S. has broken the rules that are supposed to govern international trade. Note also the political factors that contributed to the decision to impose tariffs. Finally, note the reluctance of steel producers to cut output (even though the industry as a whole -- but not consumers -- would gain from such a cutback).
39 Trade
"Rich Nations Are Criticized for Enforcing Trade Barriers",
by Edmund L. Andrews.
New York Times,
September 30, 2002.
Developed nations -- like the U.S., Japan, and many European countries -- provide subsidies to crop production, which (i) makes it difficult for poorer countries to sell their agricultural products in richer nations, and (ii) creates an increase in world-wide production that drives down prices for agricultural products. Note the relative sizes of the following: the estimated amount that poorer countries lose in agricultural revenue due to the policies of richer countries, and the "foreign aid" that richer countries provide to those poorer countries. Why is it that almost all wealthy countries subsidize their agricultural sectors?
40 Farm
"Nations Fail to Agree on Farm Subsidies",
by Elizabeth Becker.
New York Times,
April 1, 2003.
An update on many of the issues raised in the previous article. Both the U.S. and European countries claim that they will reduce their agriculural subsidies (although the U.S. in fact substantially increased their subsidies in 2002). International negotiations ate ongoing, and it remains to be seen whether any agreement to cut farm subsidies will ever be reached.
41 direct link "A Petition of the Candlemakers",
by Frederic Bastiat.
late 1840s; France.
This piece is a parody in which candlemakers petition their government to protect their industry against "unfair competition" from ... (you'll have to read the essay). The arguments used by the "candlemakers" sound remarkably like some of the arguments used today (quite seriously) by various industry representatives.
[Don't feel like you have to read this whole piece.]
42 Farm
"'Freedom to Farm' Law Becomes Freedon to Add Subsidies"
by Robert Pear.
News York Times,
June 6, 2002.
Note how widespread (and growing) is government involvement in the pricing system for agricultural products. Many politicans clearly believe that supporting such programs will gain them more political support than it will cost them. Part of the reason why this belief in (most likely) right hinges on the per-person financial effects of these programs. To farmers these plans matter a great deal -- and they'll remember at election time. To the rest of us, these plans (while very expensive in the aggregate) don't cost that much on an indiviual basis (and consumers are less therefore less likely to vote based solely on such plans).
43 Mancur
"Mancur Olson's Legacy"
by David Brooks.
The Weekly Standard,
March 16, 1998.
Mancur Olson's influential book about "collective action" presented an argument about the characteristics of groups that make some more (and some less) likely to organize to press government to support their interests. Note Olson's emphasis on how "spreading out" the costs of government activity over a large number of people makes it less likely that the affected group will organize (since they become more likely to "free ride").
Just for Fun
44 direct link "Giving Your All",
by Steven E. Landsburg.
This reading discusses how a person should (or shouldn't) divide his or her charitable contributions among worthy causes. The conclusion is surprising, but the economic logic is (I think) convincing. However, will people ever actually behave in the suggested way? [I don't. What does that say about my reasons for giving to charities?]
45 John Nash "The Genius Behind the Tree",
by S. C. Gwynne.
New York Times,
December 26, 2001.
If you haven't seen the movie A Beautiful Mind don't bother with this reading. As you may know, that movie was a fictionalized story of the life of John Nash (who shared the 1994 Nobel Memorial Prize for ERconomics). This article is a reminiscence of somebody who attended Princeton when Nash was still ill. If you're interested, here is much more information about Nash. [By the way, the scene in the movie in which the Nash character supposedly has the insight that leads to his research breakthrough is actually not an example of a "Nash equilibrium".]
46 Cooperation "Why We're So Nice: We're Wired to Cooperate",
by Natalie Angier.
New York Times,
July 23, 2002.
If the economic incentive to compete and help yourself individually is so strong, why do people so often cooperate? Part of the reason is that the economic benefits of long-term cooperation can substantially exceed the short0-term benefit of stabbing a person in the back. This article offers a more pyschological explanation. First, note that players being able to achieve a substantial amount of cooperation in a game lasting 20 rounds isn't that surprising. What would be a little more surprising is learning that the cooperation didn't start to break down near the end of the game. [The article doesn't address this.] That said, the brain scan results establishing that the existence of a "human bond" plays an important role in behavior is fascinating. Two interesting questions. To what extent do these physiological effects cause/predate "social norms" about the "proper" way to behave (like the "golden rule" that exists is so many cultures)? Also, how strong would the "good feelings" have to be to encourage cooperation if the financial stakes of the game were much higher? [Anybody ever watch "Friend or Foe? on the Game Show Network? If not, I recommend it.]

Problems with this system? Questions about the "economics" behind any of these pieces? Feel free to contact Prof. Greg Trandel.