Ec101F10L7_8a_101025

Ec101F10L7_8a_101025 - Economics 101, UCLA Fall 2010 Jernej...

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Unformatted text preview: Economics 101, UCLA Fall 2010 Jernej Copic Lectures 7 and 8 10/19/10 and 10/21/10. Time: interest-rate and discounting; Bargaining: Ultimatum game, 2-stage alternating offers game, infinite-stage alternating offers game. Part 1. Interest rates and discounting. Time and discounting. One day, No1 was dreamily reminiscing of his days as a young buck which took place during the early times of the Roman republic. No1 is indeed very old and experienced, and also greatly enjoys recounting his exciting adventures to his team; the others must patiently listen lest they should face No1s disappointment at their disrespectful behavior. In those times, No1 narrates, we, patrician Romans used to go by the saying carpe diem , representing their inclination to live life to its fullest every single day, with no apparent constraints. This was of course easy and possible - their faithful servants happily understood their place in society and provided anything needed at the whims of their patrician masters. Alas, recollects No1, we had no idea of what was coming... By the time of those damn revolutionaries, I had to start my job as a manager of this outfit, thinking about dimes and pennies... What a disgrace that I should work, and even worse, that I should think of such trivial matters, a descendant of the Greek philosopher Epicurus himself. Not only that whatever I would spend one day was gone the next I also came to realize that there was a certain trade-off. To explain this trade-off to his team, No1 refers to a particular episode when he...
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Ec101F10L7_8a_101025 - Economics 101, UCLA Fall 2010 Jernej...

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