Bryan Caplan  

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Thoughts on Comparative Effect... It's Not Who You Know, It's Wh...
Here's a spot-on response from my Ph.D. Micro final.

The Question:

True, False, and Explain:  In signaling models, selfish agents might voluntarily supply public goods.

The Answer:
True.  Yes, if donating to charities, giving blood, or sponsoring militia units or adopting part of a roadway signals, "I am a nice guy; vote for me and/or buy my products and/or marry me, because if I am this nice to complete strangers, imagine how great I am to my constituents/customers/family!  Also, I can afford to do a lot for you."  It's like potlatch!
HT: John Fast


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COMMENTS (7 to date)
ionides writes:

Are these public goods? I thought public goods had the property that consumption by one person did not diminish the amount available to others (like an open-air concert).

Dan Weber writes:

I would have stapled a $20 bill to the exam as a demonstration of my generosity, and explained that I expected an A+ in return.

Troy Camplin writes:

It is exactly like potlach (on this, read what Frederick Turner has to say about the potlach and its relation to gift). Show that you are generous with others, and it demonstrates to a potential mate that you have the finances to take care of him/her. It also shows you will likely be as kind to family as to strangers. Of course, the potlach has the potential of being an ostentatious demonstration of power, too. As it indeed turned into with the tribes that practiced it.


Victor writes:

Is charity a public good? giving blood a public good too?

lutes writes:

this was on a PhD-level final???

Zac Gochenour writes:

I'm with lutes at least somewhat. Not saying there is anything wrong with this answer (it is perfectly fine), but not exactly a hard question. I was thinking that I can't remember any questions this easy when I took the final, but upon looking at it there is at least one lightweight on the level of this question.

lutes, note that Caplan's tests feature questions of variable difficulty. The "true, false, explain" questions are usually easier. Since he grades on a curve, coming across an easy question that one expects others will find easy is a wash. In order to do well, students must differentiate themselves by giving good answers to the hardest questions as well.

In the PhD courses the questions are usually harder but more importantly your fellow students are a lot smarter. I say usually because the questions on the undergrad exams are sometimes deceptively complex. For instance,

"In Socialism, Mises writes: "[I]nterventionist measures must needs result in conditions which from the point of view of their advocates are more unsatisfactory than the previous state of affairs they were designed to alter. These policies are therefore contrary to purpose." Would Caplan agree? Why or why not?"

"Using the notions of rational ignorance and rational irrationality, explain why it is surprising that deregulation and privatization happened. Then do your best to explain why these surprising changes nevertheless occured."

Both from the undergrad IO exam I took in 2003, the class that got me hooked on economics. The latter part of the latter question is particularly good, and I really wish I had a good answer for it.

Anthony writes:

"I am a nice guy; vote for me and/or buy my products and/or marry me, because if I am this nice to complete strangers, imagine how great I am to my constituents/customers/family!"

Wouldn't someone who is nice to complete strangers tend to be less nice to those who are important to him?

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