Wednesday, January 14, 2009

For Economists Eyes Only

Allen and I met in graduate school, and while his sequence focused on environmental and computational economics while mine was more centered on labor and marxist economics, our first year of instruction was almost identical. Both of us survived Stincombe's Problem Set #3, both of us suffered through Zhang's Prob Stats, and both of us took Freeman's Macro 1.

So imagine my horror when Allen introduced a time consistancy problem at dinner last night -- a scenario where the socially optimal plan is not incentive compatible in all periods -- by offering to let Owen eat a cookie, provided he had 2 additional bites of pasta after he finished said cookie.

Owen readily agreed to the proposal, and after some complaints that the initial cookie offered was broken, happily devoured a sugar cookie with sprinkles and chocolate chips courtesy of his friend and neighbor Gavin. Afterwards, Allen spent several minutes reminding Owen that he needed to live up to his end of the bargain until finally Owen grudgingly ate 1 and only 1 additional bite of pasta.

Which means: Allen doesn't remember anything about macroeconomics and Owen is a less rational but more obedient child than two economists might expect.

1 comment:

Anonymous said...

As I have said before, Owen is wise before his years. He seems to be on track to becoming one of the leading thinkers of his era. I find it difficult to argue with wisdom.

Grandma Z