Behavioral industrial organization, power laws and the micro origins of aggregate fluctuations
2017-06-12 at 13:15
End time: 2017-06-14 at 16:00
There will be three lectures in the mini-course given on June 12 (1.15-4 pm) room 120, and June 14 (9.15-12 and 1.15-4 pm), room 720 at the Stockholm School of Economics, Sveavagen 65.
Two themes will be covered:
1. Behavioral industrial organization: when consumers don't understand fully the products they buy (e.g., they get a credit card and misunderstand the fees they're going to pay), how does welfare change? We'll see when the market corrects this or doesn't, reveal or hide the information (creating "shrouded attributes")? More generally, how to model consumer inattention, and what are the consequences for optimal policy?
2. Power laws, inequality, and the granular origins of aggregate fluctuations. We'll see that power law relationships are very common: we find them in the distribution of firms and cities, in the size of financial activity, income and wealth. We'll study mechanisms that generate those power laws, especially random growth and the "economics of superstars". These power laws generate a concentrated activity and are of consequence for both antitrust and aggregate fluctuations. Time permitting, we'll study how this generates high inequality, e.g. in the CEO market and for top incomes more generally.
Xavier Gabaix is Pershing Square professor of economics and finance at Harvard's economics department. He has published widely in the leading journals and received the Fischer Black prize given every two years to the best financial economist under 40, the Bernacer prize given to best European economist under 40 working in macroeconomics and finance, and the Lagrange and Allais Prizes.
For Syllabus see the right-hand menu.
The course is open to PhD students, or PhD's in economics – subject to approval. The course is free of charge. Register with Ritva Kiviharju before May 30.
There will be a dinner (free!) for course participants on June 12 and a simple lunch on June 14.
There will be no exam and participation does not give any credits. The course is made possible by a grant from the Swedish Competition Authority.
Stockholm School of Economics