ECN511 Economic Analysis of Public Policy Issues

• You should deliver your assignment via Blackboard.

• This is an individual take-home assignment. Prepare your answers on your own.

• In order to receive full credit for your work, you need to provide complete and detailed answers.

• Please use a font size at least 11. As of the rest style, number of pages, etc. it is completely up to you. I do not evaluate your assignment based on the literary criteria or number of pages.

• Please deliver only one file. Preferably, send a pdf file.

• List all the sources you have research during this assignment. Remarks.

A. This assignment is different than previous ones, where you had to apply economic tools like WTP elicitation or supply-demand analysis. This assignment is in the spirit of self-reflection. Your task is to ponder about how price discrimination, risk, and interactive situations are omnipresent in our lives.

B. Make sure your answers are clear, complete, and correct. Be as specific as possible. Do not leave anything for a reader’s interpretation or guessing.

C. To explain something “in your own words” means to refrain from using the formal definitions. Always imagine that you are talking to someone with no prior knowledge of economics.

Exercise 1 (30 points)

a) (10 points) In your own words, explain what "price discrimination" is.

b) (20 points) Provide a real-life example of price discrimination that involved you as a customer or seller. Exercise 2 (30 points)

a) (10 points) In your own words, explain what "risk" is. In particular, explain the difference between “risk” and “uncertainty.”

b) (20 points) Provide a real-life example of decision involving risk that involved you as a decision maker. Describe the process of decision making. Explain the alternatives you were choosing from, how you analyzed them, and what choice you made. Exercise 3 (40 points)

a) (10 points) In your own words, explain what a “game (interactive situation)" is.

b) (30 points) Support your explanation with a real-life example of a game (interactive situation) that involved you as one of the decision makers (players). To describe a game, recall the three fundamental elements: players, strategies, and payoffs. Bonus Exercises

I would like to ask you some questions that are more about you and less about economics. In fact, these questions are not about economics at all. (If you see economics in these bonus exercises, it only means there was too much economics and it is a good thing that this course is over...) Exercises A and B will help me get to know you better as a person. I already know a lot about you in terms of your professional life and as a student. I do not know you that well as a person. I would like you to carefully think about these questions and answer as truthfully as possible. If you are not comfortable answering these questions, then please do not answer. I am looking for interesting stories. Bonus Exercise A (5 points)

I have a time machine that you can use at zero cost. You could make only one trip that lasts 1 hour. You can travel to the past or to the future. You can observe and take pictures. You can experience smells and sounds. However, you will not be able to touch anything or interact with anyone. Your presence will not be recognized. You cannot change the past or future. You are just an observer. When (year) and where (place) would you go to? Remember that you have only one trip: pick one time and destination carefully. Explain your choice. Bonus Exercise B 5 points.