Managerial Economics and Business Strategy
Course Information
ECON 308 001, Spring 2011
Class Meetings: TR 9:00 AM–10:15 AM, Innovation 134
Office Hours: TR 10:30 AM–11:30 AM and by appointment, Enterprise 342
Prerequisite
Students who have passed ECON 306: Intermediate Microeconomics should be well prepared for this course. As with ECON 306, you should have passed one semester of differential calculus. Students are expected to be comfortable with functional relationships, graphing, and optimization.
Course Goal
This course will introduce students to the nature of the firm, why they exist, and how they are structured (their "organizational architecture"). Students will learn introductory game theory and its applications. Students will be introduced to the economics of information and incentive analysis, including applied topics such as management compensation, effort pay, and tournament competition. We will also discuss problems surrounding incentive design.
Scott Adams understands when incentives fail.
Texts and Resources
Required texts: 1. Douma, Sytse, and Hein Schreuder. Economic Approaches to Organizations. 4th ed. London: Financial Times/Prentice Hall, 2008. 2. Dixit, Avinash K., and Barry J. Nalebuff. The Art of Strategy: A Game Theorist's Guide to Success in Business and Life. New York: W. W. Norton, 2008.
While we are discussing game theory, I recommend watching Benjamin Polak's Yale lectures 1 on the topic.
Attendance
Attendance will be recorded at the beginning of each class. Attendance is not strictly required, but your grade partially depends on it. I do not administer make-up exams or quizzes, and missed assignments receive no points.
Recording Policy
You are given permission to record lectures.
Grading
| Assignment | % |
|---|---|
| Homework and Quizzes | 20 |
| Mid-term Exams | 30 |
| Final | 40 |
| Participation | 10 |
The grading scale for this course is curved, which is to say I wish the final distribution of the grades to look like a bell curve.2 Most students can expect to fall into the B range. This will not be onerous, but it will require you to keep up with readings, complete all assignments, and turn in quality work. When I grade on a curve, this does not mean there is a fixed stock of C's or F's to be handed out (I do not award D's). If you all do well and meet my expectations, you will all earn A's or B's.
Any changes made to the grading policy will benefit all students.
Homework
Homework usually consists of short essay questions or word problems, and is assigned at the end of each class. Homework assignments are short, but frequent. This serves two purposes: (1) it keeps the material fresh in your mind, and (2) it provides me with feedback.
Homework should be submitted via e-mail. I prefer plain text formats.
You are permitted to discuss homework assignments with each other.
Quizzes
Quizzes will be given on the reading material from time to time. They are unannounced and infrequent.
Exams
Exams will be administered in our normal classroom. Two midterms will take place, one on February 22 and another on April 5, at the usual time. The final will take place on May 17 at 7:30 AM in accordance with the University exam schedule. We can move the exam forward a bit if there is unanimous consent.3
The exams are closed-book and closed-note. You may not receive help from other students in completing the exams.
Participation
Attendance determines your participation grade. Being an active participant in class discussions improves the quality of the course. As a reward for active participation, you may earn plusses and minuses to your letter
Schedule
This is a rough sketch of the semester. I'm in the process of reorganizing the course, so I have not prepared a reading schedule. Readings will be assigned at the end of each class, and should take about two hours each week.
| Weeks | 1–4 | 5–10 | 11–15 |
| Topics | Game Theory | Information | Evolutionary Organization |
| Prisoner's Dilemma | Asymmetry | Managerial Compensation | |
| Cooperation | Adverse Selection | Tournaments | |
| History of the Firm | Moral Hazard | Incentive Problems | |
| Markets | Application in Finance | Org. Architecture | |
| Auctions | Signaling | App. to Education | |
| Incentive Pay | Corp. Governance | ||
| Industrial Organization |
For other important dates, please see the university's Fall 2010 Semester Calendar.4
In the event of inclement weather, please see Mason Alert 5 to verify classes have been cancelled. You can also sign up for e-mail and SMS alerts at this site. If we miss several classes, we will discuss the possibility of a make-up meeting.
Getting in Touch
I will endeavor to respond within 24 hours to e-mail messages, but I make no guarantees. If you have a question, do not hesitate to e-mail me. Waiting until the last minute means your question may go unanswered. I get hundreds of e-mails a day, so including "ECON 308" in the subject line helps me filter, which allows me to respond more quickly to your questions.
Please pay attention to your GMU mail quota. You are responsible for any assignments that may be e-mailed to you. If you are have your e-mail forwarded to another address, it is not deleted from the GMU servers after forwarding, so boxes can fill quickly.
Honor Code
All George Mason University students have agreed to abide by the letter and the spirit of the Honor Code. You can find a copy of the Honor Code online.6
Violations are reported directly to the Honor Committee. No exceptions.
Students are expected to turn in their own work. Work should be original. Cite others if you use their ideas.
I may, at my discretion, employ the use of online anti-plagiarism services.
Disability Information
If you are a student with a disability and you need academic accommodations, please see me and contact the Office of Disability Services (ODS) at 993-2474. All academic accommodations must be arranged through the ODS. For more information, see the Office of Disability Services Website.7