week 1 - powerpoints
The origins of democracy - Robert k. Fleck and F. Andrew Hanssen
research question: how can we explain that different societies have different levels of democracy?
predictions from their theory:
> democracy is a concession of power from the elite to the masses
> the elite detains power and is interested in exploiting the masses
> if the ground is easy to control, the elite can oblige the masses to work by using force
> if the ground is difficult to control, force will not get the masses to work
the elite meets to assure te s I (0, 30)
o pria
the masses there will be the time-inconsistency problem
exp
r
no ex post expropriation elite
••
s
concession of power from est elite
r inv doe
sn
me ot e
elite to the masses works elite commits far xpr
opr
not to expropriate iate
as a guarantee from ex Go .
(15, 15)
post expropriation (solution) far
me
rd
oes
not
inv
est < (10, 10)
to ty t2 t3
prediction 1: prediction 2:
There is a lower likelihood of democratic There is a greater likelihood of democratic
institutions where the level of output without the institutions where the investment yields a large
investment is high (high r) and a greater likelihood increase in output (high i) and a lower likelihood of
of democratic institutions where the level of democratic institutions where the investment yields
output without the investment is low (low r). a small increase in output (low i).
2 authors
Robert K. Fleck F. Andrew Hanssen
> professor of economics > professor in Economics
disciplines: disciplines:
> political economy > institutions
> public finance > law and economics
> economic history > political economy
> law and economics > industrial organization
> development economics
, week 2 - powerpoints
Article: does anyone read the fine print? positive externality:
> the ones who read pay cost of reading
research question: do people read the fine print? and why? > all others benefit better contracts
predictions: eula: end user license agreement
> contracts contain standard terms that apply to buyers
> these terms are in a standard form
> reading and understanding contracts takes a lot of time
> if nobody reads the terms of a contract, firms can write whatever they want in there
informed minority hypothesis: a minority does read the terms and this minority is large enough to put
pressure on the firm to offer good terms to the consumer.
buyers
hypothetical testing example: criminal trial
h0: defendant is innocent readers -
H0: hypothesis to be tested h1: defendant is guilty non buyers
shoppers
H1: alternative hypothesis -
buyers
rejecting H0 means that the hypothesis to be tested is very unlikely non readers
.
the chosen significance level determines when H0 wil be rejected. -
non buyers
procedure of hypothesis testing:
1. formulate. hypothesis readers
2. choose a significance level I
non shoppers
3. run the tests non readers
4. determine the probability that the results of the test would be obtained if H0 were true
5. reject H0 if this probability is lower than the significance level
statistical significance versus economic significance
economic significance: the results should have a sizable effect
The origins of democracy - Robert k. Fleck and F. Andrew Hanssen
research question: how can we explain that different societies have different levels of democracy?
predictions from their theory:
> democracy is a concession of power from the elite to the masses
> the elite detains power and is interested in exploiting the masses
> if the ground is easy to control, the elite can oblige the masses to work by using force
> if the ground is difficult to control, force will not get the masses to work
the elite meets to assure te s I (0, 30)
o pria
the masses there will be the time-inconsistency problem
exp
r
no ex post expropriation elite
••
s
concession of power from est elite
r inv doe
sn
me ot e
elite to the masses works elite commits far xpr
opr
not to expropriate iate
as a guarantee from ex Go .
(15, 15)
post expropriation (solution) far
me
rd
oes
not
inv
est < (10, 10)
to ty t2 t3
prediction 1: prediction 2:
There is a lower likelihood of democratic There is a greater likelihood of democratic
institutions where the level of output without the institutions where the investment yields a large
investment is high (high r) and a greater likelihood increase in output (high i) and a lower likelihood of
of democratic institutions where the level of democratic institutions where the investment yields
output without the investment is low (low r). a small increase in output (low i).
2 authors
Robert K. Fleck F. Andrew Hanssen
> professor of economics > professor in Economics
disciplines: disciplines:
> political economy > institutions
> public finance > law and economics
> economic history > political economy
> law and economics > industrial organization
> development economics
, week 2 - powerpoints
Article: does anyone read the fine print? positive externality:
> the ones who read pay cost of reading
research question: do people read the fine print? and why? > all others benefit better contracts
predictions: eula: end user license agreement
> contracts contain standard terms that apply to buyers
> these terms are in a standard form
> reading and understanding contracts takes a lot of time
> if nobody reads the terms of a contract, firms can write whatever they want in there
informed minority hypothesis: a minority does read the terms and this minority is large enough to put
pressure on the firm to offer good terms to the consumer.
buyers
hypothetical testing example: criminal trial
h0: defendant is innocent readers -
H0: hypothesis to be tested h1: defendant is guilty non buyers
shoppers
H1: alternative hypothesis -
buyers
rejecting H0 means that the hypothesis to be tested is very unlikely non readers
.
the chosen significance level determines when H0 wil be rejected. -
non buyers
procedure of hypothesis testing:
1. formulate. hypothesis readers
2. choose a significance level I
non shoppers
3. run the tests non readers
4. determine the probability that the results of the test would be obtained if H0 were true
5. reject H0 if this probability is lower than the significance level
statistical significance versus economic significance
economic significance: the results should have a sizable effect
