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.
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
The ever growing and prosperous capitalist economy of America is considered by many to be a near perfect system. Our economy helps ensure success is attainable, without detriment to any one person or any group. Unfortunately, this perception is not reality. The American economic system has brought about many negative externalities, most notably the environmental impact our corporations have made on our planet. Greed and overindulgent behavior of businesses have led to a possible environmental apocalypse. Large egocentric corporations are causing fossil fuels to be near extinction, mass pollution and destruction of vital habitats, and carbon emissions to rise. These negative externalities that are caused by corporations need to be reduced or abolished. At the moment the government is doing very little to stop corporations from destroying the environment. President Obama’s current environmental policies are very vague and undisruptive. Over the past 5 years Obama has enacted the Recovery Act and attended the Copenhagen meeting. These actions have led to very minimal environmental recovery. The Republicans and corporate lobbyists are not doing much to promote the environment either. In fact “The big business lobbies, like the Chamber of Commerce, American Petroleum Institute, and others, have been very clear and explicit in their support of commerce over the environment. A couple of years ago they stated they intend to carry out a major publicity campaign to convince people that climate change is not real, that it’s a liberal hoax.” Republicans and corporate lobbyist are actually denying the existence of an environmental problem even though the statistics show otherwise. In 2012 carbon emissions increased 2.6%. Increased carbon emissions will weaken the atmosphere and dangerously heat up the earth. Due to pollution, only 1% of Chinese citizens breathe air that is considered safe. This has caused cancer to be the leading cause of death in many parts of China. The north pacific gyre has approximately 100 millions tones of trash. This trash will harm sea life, and take centuries to dissipate. These facts show that environmental damage is extreme, and impacting quality of life on the planet. At the moment corporations are acting out of self-interest and greed. This will be an on going predicament unless there’s some alternative policies initiated. I believe that slight regulation as well as higher prices and taxes for certain fossil fuels will help alleviate the environmental woes. At this point in time, large businesses have too much power and freedom, which is causing large negative externalities. Creating higher taxes for fossil fuels, will promote switching to alternative methods of energy production. This will give corporations incentive to switch to cleaner energy. In addition, raising the price of certain fossil fuels like gas and oil will have a great affect on the consumer. Due to higher gas prices ,the consumer will most likely feel the need to utilize a car that does not rely on oil. Consequently, demand for gas run cars will decrease, and companies will start to make more eco-friendly cars that appeal to the consumer’s tastes and preferences. I also believe that we should implement stricter regulations. Unfortunately, large amounts of greed have consumed the American economy in the past 30 years. Corporations have started to deviate from rudimentary business ethics. The federal government needs to take some control over the reckless corporations. In recent years, deregulation, corruption, and greed has destroyed the earth, and the government has done very little to stop it. Implementing the right policies and actions will make the environmental problem treatable and will help the planet for all its citizens.