How do you teach introductory microeconomics? It's easy if you're teaching motivated and mathematically able students - just present the analytical techniques and let them puzzle out solutions to problems. But it's harder when teaching students who have less interest or ability in mathematics. What are the essential lessons they should take away from the class, and what's the best way to communicate them?

What is Essential for Students to Take Away from Introductory Micro? (Work in Progress)

  • Principal-agent problem and the need for incentive design
  • The theory of rational behavior, how it compares with behavioral evidence, and the implications of that
    • Information problems are much more common than many introductory textbooks imply
    • The problem of judging risk
    • The "rational consumer" is just a model
  • Why we encourage competition
  • Gains from trade
  • Price discrimination
  • The use of models
    • Why do we need models?
    • What are the traps in using models?
    • We assume rational behavior most of the time
      • But this doesn't account for stupidity
      • Some things can't be explained by rational behavior
  • The importance of information
    • Difficulty in assessing quality e.g. of surgeons, health insurance programs
    • Search costs
  • Speculative bubbles — market misbehavior
    • Asset markets
  • Game theory
    • When and why we use it
    • Conflict between behavior and hyper-rational models
  • Innovation and Schumpeterian competition
  • Equity and equality
  • Explain the credit crisis
  • more to come

Lessons in the Counterintuitive

  • Why wouldn't we insist on "buying American" for the stimulus spending?
    • Wouldn't this create a greater multiplier effect?
  • to come

More Ideas and Random Thoughts on How to Teach Micro

Some principles:

  • Start from where students are, not where you want them to be
    • Cost and opportunity cost
      • How do you decide which movie to see and where to go see it?
  • Appeal to their intuition
  • Deal with real world issues: analysis is the tool, not the end
    • International trade: should we buy American?
    • A living wage
  • Need to explain the credit crunch


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