The WordPress.com stats helper monkeys prepared a 2013 annual report for this blog.
Here’s an excerpt:
The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 9,200 times in 2013. If it were a concert at Sydney Opera House, it would take about 3 sold-out performances for that many people to see it.
— ParishGOV and ECON (@ParishGOV) May 24, 2013
Welcome to our blog!
This is a class blog authored by student contributors and curated by their teacher, Dave Ostroff.
The posts on this blog are part of an ongoing assignment in our Government and Economics course at Parish Episcopal School (Dallas, TX). The major goal of our course is to prepare students for responsible citizenship in the 21st century. Students post reflection pieces on a rotating basis. We invite you to return often and read what we write!
Please read the specifics of our class blog assignment here.
View our class blogging and commenting guidelines here.
My grandfather, William Campbell (1927-2013), played a large roll in theorizing the Winner’s Curse by applying physics equations to economics. The winner’s curse, in simplest terms, is the idea that the winner of a common value auction tends to overpay. Within competitive bidding, the winner’s chances of overbidding increase as the number of bidders, or consumers demanding the item, increases (Investor words). Each bidder estimates a certain price; some overestimate and others underestimate. The one who overestimates usually wins, and therefore is “cursed” with an item that is not truly worth what he or she estimated for. Such a curse can occur in two similar, yet slightly different ways: the winning bid exceeds the value of the tract, so the firm loses money; or the value of the tract is less than the expert’s estimate so the winning firm is disappointed (Anomalies: The Winner’s Curse).
While working for the Atlantic Richfield Company, otherwise known as Arco, my grandfather was summoned to his boss’s office and asked a simple question with a complex answer: how can we save money? After strenuous research and collaboration, the team of engineers and physicists discovered that competition within bidding creates an atmosphere that does not usually allow the winner to truly win. In order to understand such a concept, consider an auction of a piece of land that has five million barrels of oil beneath it. No one actually knows the value of the land; so, some engineers will overestimate the value of the property and others will undervalue it. Most likely, the company that overrated the property will be willing to pay more and thus win the auction. So, we can conclude that within “competitive bidding, the winner tends to be the player who most overestimates the true tract value” (Competitive Bidding in High-Risk Situations). The variable cost of oil does fluctuate as supply and demand increase and decrease, which creates even more risk in an already dicey oil business.
At the same time, the winner’s curse does not necessarily apply to an auction marketplace like eBay. The winner’s curse only applies to competitive lease sales, or an auction with limited supply and excess demand. Marketplaces like eBay and Craig’s List have more supply than demand, allowing consumers to search for the lowest possible price before purchasing an item; thus, producers compete and lower prices. The prices approach equilibrium. Within competitive bidding for a single item, the price cannot approach equilibrium because excess demand disallows such a balance.
By no means is the winner’s curse a bid strategy; it is a mere analysis on what not to do. However, three simple rules can be followed to avoid being that guy who enthusiastically wins an auction only to watch his property slowly diminish in value: the less information one has compared with what his opponents have, the lower he ought to bid; the more uncertain one is about his value estimate, the lower he ought to bid; and the more bidders (above three) that show up on a given parcel, the lower one should bid.
Right now I could be playing with my chickens because they’re so cute but instead I’m doing my homework; the ‘opportunity cost’ of me doing my homework is not being able to play with my chickens. But I do choose to do my homework instead of playing with my chickens because I think it’s ultimately the better choice.
Do you ever wonder where and who produces your the favorite phone, IPad or computer? The Foxconn City is a complex of factories that house persons working for them producing Apple, Microsoft, Dell and Hewlett Packard project. Foxconn Technology Group, who owns the complex of factories, and employs 235,000 workers, has a reputation of tough tactics and sweatshop condition for their workers producing these in demand products. According to the Daily Mail, Apple Corporation uses sweatshop environments to produce the products that are sent to the west. Apple, for example, sold 93 million IPhones, 40 million IPads, 38 million IPods and 17 million computers, yet they are involved with a company that is paying the Chinese workers far below United States minimum wage earning a whopping $1.75 per hour or $273 per month, which would require months of work in order to be able to purchase one the products they make. Reports have indicated that workers were recorded doing 24 hours shifts at a time, while others were forced to stand up during their entire shift. These people are producing the phones and apple products that are craved all over the world, while working in a monotonous, tedious, assembly line environment under what looks clean, but horrible conditions. Many workers have committed suicide because of the harsh conditions in the factories; many factories have been forced to install suicide nets around their facilities.
Even though abuses continue, Apple contends that they have sent 60,000 workers to college for free and have informed one million staff of their legal rights. Chief-executive Tim Cook claims that they are working hard to improve the conditions for workers and are trying to improve the lives of employees. He is working with Foxconn to fix the problems. However, there are still reports of 150 Foxconn employees threatening to leap from the facilities because of poor working conditions and low wages. Given the rise in Apple stock it seems that something could be done to improve the conditions of the low wages.
A Company’s main goal is to make as large of a profit as possible. These sweatshops are the most efficient way to make large gains. But do the cost outweigh the benefits? Many major companies like Apple believe in improving the working conditions of their employees. These companies are only left to wonder whether consumers would be willing to pay a higher price for their product in exchange of knowing these products are being produced the right way. According to basic economics and the law of demand, if a company raises the price of their product demand will decrease. When a product price rises, many consumers will be tempted to look at a substitute at a cheaper price, so therefore, when a company raises its price their demand will decrease.
Goober is a product created by Smuckers which combines the two complements, peanut butter and jelly, into a single product. Smuckers utilized the economic term of complements in creating this product. -Catherine G