1. Good Day!DRAW A LINE SEPARATING TODAY & YESTERDAY 1) Write: Date:01/13/10 , Topic:Sustaining Markets, Part 2 2) On the next line, write Opener #5 and then:1) Plot your mood, reflect in1 sent . 2) Respond to the opener by writing at least2 sentencesabout : Your opinions/thoughtsOR/AND Questions sparked by the clipOR/AND Summary of the clipOR/AND Other things going on in the news. Announcements: None Intro Music: Untitled

2. 3. Work #5a , Title Opener Shareout Pick 1 thing from your opener to share with your partner. 1) Each of yousign your name in yourpartners workbookunder1) to verified youve shared. 4. 5. Agenda 1)Behavior Econ: Incentives 2)When do markets fail? 3)Tragedy of the Commons 4)Negative Externalities End Goal, you will be able to 1)How do we contribute to market failure? Reminder 1) Find & complete your 4 news pods 6. Reminder 1) Find & complete your 4 news pods (new source: Marketplace, NOT Newshour) 2)Blog Update 3) First Day Forms 7. 8. Review 4 Things for a Healthy Market: a)Private property rights (including intellectual) GOV ROLE: Police + Courts b)Freedom to spend (buy) + make (start biz)money how you wantGOV ROLE: Limited gov + anti-trust protection c)Freedom to exchange goods/services GOV ROLE: Reliable roads, stable money, accurate measures, fraud protection d)Freedom to keep your profits GOV ROLE: Reasonable tax rates 9. Work #5b , Title Video: Greed 1)Copy Source Title: John Stossell 2)Discuss questions on the board with a partner. Summarize your discussion ( include theirnameat the end ).Remember participation points are deducted if off task.5 Reading/Film Qs Come From These Work Sections Time Bookmark: 00:00 10. Behavior economists have researched greed, and attempted to harness it in the form of incentives. 11. 12. Contest Rules: 1) No stealing money 2) No touching anyone 3) No doing anything dangerous 13. 14. Notes #5a , Title: Behavior Economics 1) Incentives : Pressures used to elicit a behavior a)3 Incentive Types :i) Economic : Financial Pressure ii) Social : Peer Pressure iii) Moral : Self Pressure b)Perverse Incentive : Pressures that lead ppl to do the opposite of what you intended. 15. i) Economic : Financial Pressure 16. ii) Social : Peer Pressure 17. iii) Moral : Self Pressure 18. 19. Humans are more driven by incentives then rules Lets assume that youre a lawyer making $100/hr. Driving illegally in carpool saves you 1 hrs/day. You get ticketed $300 on average once a month.What might some people do in this scenario? 20. 21. 22. Is offering some type of gas tax credit to relieve some of the cost of gas a perverse incentive? 23. Is giving a car company that made bad cars money creating a perverse incentive? 24. Is giving financial firms money that made investments in housing a perverse incentive? 25. Work #5c , Title Incentives Ask your partner ( include their name ): 1)Which incentive is most powerful over society? 2)Which incentive is most powerful over yourself? Incentives: Which is more powerful? 1) Financial Incentives Cant pay everyone for everything 2) Social Incentives People arent always watching 3) Moral Incentives At times the weakest, but also the strongest (ppl die for what the believe in) 26. Work #5c , Title Lit: Incentive Readings 1)Copy Source Title:Freakonomics + Nudge Read, and then respond to: 2)What problem were they were facing inFreakonomics ? 3)What was the results of their solution? 4)What is the concept of Nudge ? 5)What were some nudges suggested you think are good ideas?(Note: Nudge is 1 of Obamas fav) Bonus Q 6) Based on the ideas of Freakonomics + Nudge, is there something you see in your world or the wider world that can be done better? 5 Reading/Film Qs Come From These Work Sections 27. Economist are reluctant to ban things, they rather use incentives and design things to nudge people. 28. Choice Design (Richard Thalers Nudge) 29. 30. 31. Work #5e , Initial Assembly Bills Before the governor (Mr Chiang) signs the bills, he wants the voters input. 1)Howcapitalist, socialist, or communistare the current bills that are proposed?2)Would you support or be against the real CAs legislature, if it wrote laws with the sameintents as conveyedin the bills before you? 3)What do you predict to be the long termpros/consof this legislation? 4)Whatchangesdo you think should be made to the bills? 32. Ways to Make Chiang Money 1)Better job 2)Spend less 3)Make $ on stock market (nx week) 4)Sell legal things to classmates (Fri: marketplace, study notes, BUT youcannot sell homework/projects .) Roles during break: Landlords:Circle territ, write in rent, Collect Rent + 360 (2 chk) Bankers:Deposit salary, withdrawchecks 33. Fish live in the common (arent owned), can greed+incentives save threatened animals? 34. Fisherman Simulation Instructions 1)When I say GO you can take as many as you want. Who hasthe most wins a 4 ptparticipation. 2)What ever is left in thebowl (ocean)at the end of the roundgets doubled . 35. Work #5f , Title Incentives Answer these questions ( include their name ) : 3) Summarize what happened in thesimulation ANDexplain if you think we should sale all the remainingthreatened animalsto private farms? 4) Come up with an example afinancial incentiveused to shape your actions 5) Come up with an example asocial incentiveused to shape your actions 6) Come up with an example amoral incentiveused to shape your actions 7) Come up with an example aperverse incentiveBe Prepared to Present 36. Work #5g , Organ Debate 1)Read the 4 sides, choose 1 side, and write which you choose andexplain why . 2)Then write down what your partner thinks ( include their name at the end ). a) Voluntary organ donors (current system) b) Set default to organ donor (choice design) c) Let people sell their organs (free market) d) Require all dead to donate organs (communal) 37. Organ Donor Clip 38. Market Failures: Weve spent 3 days praising the power of free markets, now lets see when they fail. 39. Homework:1)Study todays notes + work sections for apossible workbook quiz . 2)Pick and listen to your4 news podcastby next Monday. Workbook Check:If your name is called, drop off your workbook with Mr. Chiang ( if requested, points lost if your workbook is not turned in )