《西方经济学》双语课件ch22-Frontiers of Microeconomics.ppt

In this chapter, look for the answers to these questions: How does asymmetric information affect market outcomes? How can market participants reduce the resulting problems? Why might democratic voting systems fail to represent the preferences of society? Why do people not always behave as rational maximizers? Introduction Microeconomics continues to evolve. This chapter introduces three active areas of research: asymmetric information political economy behavioral economics Asymmetric Information Information asymmetry: a difference in two or more parties’ access to relevant knowledge Two types: Hidden actions – one person knows more than another about an action he or she is taking. Hidden characteristics – one person knows more than another about the attributes of good he or she is selling. Hidden Actions and Moral Hazard Moral hazard: the tendency of a person who is imperfectly monitored to engage in dishonest or otherwise undesirable behavior Workers sometimes shirk their responsibilities because their employer cannot continually monitor their effort and performance. Someone whose property is insured may not try as hard to protect it from theft/damage. While the parents are out, the babysitter may spend more time watching videos than watching the children. The Principal-Agent Problem Agent: a person who is performing a task on someone else’s behalf (e.g., a worker) Principal: is the person for whom this action is being performed (e.g., an employer) When the principal cannot perfectly monitor the agent’s behavior, there is a risk (“hazard”) that the agent may do something undesirable (“immoral”). E.g., worker may play video games or surf the web while on the clock. How Principals May Respond Better monitoringParents plant hidden cameras in the home to increase the chance of detecting undesirable behavior. Higher wagesEmployers pay workers efficiency wages (wages above the equilibrium level) to increase the penalty for being caught shirking.