Frederick Mayer & Alex Pfaff Fall PPS 501: Political Economy of Public Policy Mondays 2:50-5:20 Sanford 224

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1 Frederick Mayer & Alex Pfaff Fall 2008 PPS 501: Political Economy of Public Policy Mondays 2:50-5:20 Sanford 224 The primary goal of this course is to provide first-year PhD students with an introduction to the core topics of public policy as a discipline. Assignments and grades Grades will be based in equal measure on class participation, weekly written assignments, a term paper, and a final exam. 1. Class participation begins with regular attendance, both for this class and also of the research workshop. Students will be expected to come to class prepared to discuss the readings. 2. Weekly written assignments will be designed to complement the class discussions. 3. A page term paper. 4. Final exam. Readings The following books are available for purchase from Amazon and other booksellers: Robert Axelrod, The Evolution of Cooperation Russell Hardin, Collective Action R. Duncan Luce and Howard Raiffa, Games and Decisions Elinor Ostrom, Governing the Commons Howard Raiffa, The Art and Science of Negotiation Thomas Schelling Micromotives and Macrobehavior Thomas Schelling, The Strategy of Conflict Brian Skyrms, The Stag Hunt and the Evolution of Social Structure Edith Stokey and Richard Zeckhauser, A Primer for Policy Analysis Other readings are available on Blackboard under Course Documents Term Paper The terms paper should be pages in length that investigates a policy issue of interest to you, analyzing the nature of the problem in terms of the theoretical ideas of the course. What explains why there is a problem? What failures of market and collective action are (plausibly) causal? What is the evidence for this hypothesis? What additional evidence might one seek to test it? Schedule of Classes, Readings, and Assignments 8/25 Why public policy? Why theory vs. observations? (Mayer and Pfaff)

2 Friedman, Milton "The Methodology of Positive Economics." in Essays in Positive Economics, edited by Milton Friedman. Chicago: University of Chicago Press. (Can be found in Course Readings) Dan Hausman. Why look under the hood? 9/1 Market Potential & Market Failures I: Externalities. (Pfaff) Schelling, Micromotives and Macrobehavior, Chapter 1 Ian Parry, Margaret Walls, Winston Harrington, "Automobile externalities and policies." Journal of Economic Literature, June F.A. Hayek, The use of knowledge in society. American Economic Review, Sept Hal Varian. An ipod has global value. New York Times Economic Scene 6/28/07. Stokey and Zeckhauser Chapter 14 J. Gruber, Public Finance and Public Policy. Chapters 5 & 6 on externalities J. Hindriks and G.D. Myles Intermediate Public Economics. Chapter 7: Externalities R.H. Coase The problem of social cost. R.H. Coase Notes on the problem of social cost. 9/8 Market Failure II: Property Rights & The Coase Theorem (Pfaff (& Wiener?)) EPA, Clearing the Air: The Facts About Capping and Trading Emissions, 2002 EPA, Acid Rain Program, 2005 Progress Report, 2006 Ellerman, US Experience with Emissions Trading: Lessons for CO2 Emissions Trading, 2005 Weiner, Designing Global Climate Regulation, 2002 Easterbrook, Al Gore's Outsourcing Solution, 2007 Weiner, Think Globally, Act Globally /15 Market Failure III: Public Goods & The Commons (Pfaff) J. Gruber, Public Finance and Public Policy. Chapter 7: Public goods. Garrett Hardin. The Tragedy of the Commons. Carol Rose. The Comedy of the Commons." Ostrom, Governing the Commons, chapters 1 and 2 Russell Hardin, Collective Action, chapter 7 9/22 Market Failure IV: Asymmetrically Incomplete Information (Pfaff) J. Hindriks and G.D. Myles Intermediate Public Economics. Chapter 9: Asymmetric information. George Akerlof The market for lemons. Quarterly Journal of Economics 84(3).

3 Schelling, Thermostats, lemons, and other families of models, in Micromotives and Macrobehavior, Chapter 3. 9/29 Collective Action I: The Nature of the Problem and an Introduction to Game Theory (Mayer) Frederick W. Mayer, The Problem of Collective Action, Chapter 2 of Narrative and Collective Action, forthcoming. Russell Hardin, Collective Action, Introduction and Chapters 1-4, pp R. Duncan Luce and Howard Raiffa, Games and Decisions, pp. 1-11, 56-73, Thomas Schelling, What is Game Theory? in Choice and Consequence Thomas Schelling, The Stategy of Conflict, chapters 3 and 4. 10/6 Collective Action II: Intro to Game Theory Continued (Mayer) Brian Skyrms, The Stag Hunt and the Evolution of Social Structure, pp Schelling, Micromotives and Macrobehavior, Chapter 7, Hockey Helmets, Daylight Savings, and other Binary Choices. Robert Axelrod, The Evolution of Cooperation. 10/13 FALL BREAK 10/20 Collective Action III: Basics of Negotiation Analysis (Mayer) Luce and Raiffa, Games and Decisions, pp Schelling, An Essay on Bargaining, in The Strategy of Conflict Howard Raiffa, The Art and Science of Negotiation, pp , /27 Collective Action IV: Multi-Party and Multi-level Negotiations (Mayer) Raiffa, pp Mayer, Multi-level Games, in Handbook of Multilevel Governance, forthcoming. Robert Putnam, Diplomacy and Domestic Politics, International Organization. 11/3 Collective Action V: Dynamic interactions (Tipping points, contagion, critical mass) (Pfaff (& Ananat?))

4 Schelling, Micromotives and Macrobehavior, Chapters 4, 5, and 6 Elizabeth Ananat, Railroads and Segregation Others TBA 11/10 Cognitive, Behavioral and Cultural Critiques of Rational Choice (Mayer and Pfaff) Daniel Kahneman and Amos Tversky, Rational Choice and the Framing of Decisions, in Karen Schweers Cook and Margaret Levi, eds., The Limits of Rationality, Chicago University Press, Herbert Simon, The Psychology of Thinking: Embedding Artifice in Nature, in The Sciences of the Artificial, Wolfgang Pesendorfer, Behavioral Economics comes of age: A review essay on Advances in Behavioral Economics Journal of Economic Literature, Sept (3). Schelling, The Mind as a Consuming Organ, in Jon Elser, ed. The Multiple Self, Cambridge University Press Jerome Bruner, Acts of Meaning, Harvard University Press, 1990, Chapter 1. Richard Easterlin Explaining happiness Proceedings of the National Academy of Sciences 100:19, /14 DRAFT PAPERS DUE 11/17 Governance I: The Purpose of Government (Mayer) Thomas Hobbes The Leviathan, Chapters 17 and 18. Jean Jacques Rousseau The Social Contract: Or Principles of Political Right, Translated by G. D. H. Cole, Book 1 Others TBA Paper presentations I 11/24 Governance II: Non-governmental Institutions (Mayer and Pfaff) Robert D. Putnam, Social Capital and Institutional Success, in Making Democracy Work: Civic Traditions in Modern Italy, Princeton, 1993, pp CSR and its potential. Skyrms, The Stag Hunt and the Evolution of Social Structure, pp Paper presentations II THANKSGIVING BREAK Final Papers Due

5 Final Exam