In this article I summarize the recently published paper by José Alcalde . In this article, the author discusses the current matching mechanism that is used in Spain to assign medical graduates who pass the MIR exam to residency positions. The system works as follows. Students are ranked according to their marks in the MIR […]
Ravallion (2018) questions the thesis that globalization has been a major driving force of inequality. While this is the conclusion of two recently published books (Bourguignon, 2016 and Milanovic, 2016 ), Ravallion argues that their interpretation of the data is not well supported and that is even contradicted by the economic research. Here is a […]
Conspicuous consumption can be broadly defined as the type of consumption that does not satisfy a direct need or want, but rather, a desire to be regarded as someone that occupies a higher position in a hierarchy. For example, I buy a Picasso not because I particularly like the painting, but because, hanging on a […]
One of the topics of discussion within behavioral economics is the motivation of effort. Although the typical economic model usually assumes monetary incentives, they do not preclude the existence of other factors, like preferences for being first or psychological and economical benefits from reputation. The growing experimental literature on this area will help to determine […]
In many group decisions unanimity is required to ensure that a reform will be adopted only if it benefits all its members. Multinational organizations may be the best example of this. However, when members have incomplete and private information about the convenience of the reform, a majority rule with veto power performs better in the […]
The most used mechanism to guarantee universal education in a country is by providing free public education, where public means both publicly financing and public provision. Milton Friedman (1962) made the case to keep the public funding but make the provision private through a system of school vouchers. Say that the State spends 100 per […]
Economics needs theory, lab experiments, historical data and field evidence. Pilot programs and randomized controlled trials are particularly credible from the point of view of internal validity. However, the results of these “proof-of-concept” studies do not necessarily extend beyond the context in which they where implemented or scale up if they are generalized. Banerjee et […]
Competitive markets are a well understood economic mechanism. The Economic Theory explains remarkably well, at least for a social science, its properties and success along economic history. We have lab experimentation (see here), and plenty of historical evidence that a market oriented society improves upon a non-market oriented one. It has happened in democracies like […]
Very often Economics is censured for using unrealistic assumptions, like that stating that people are selfish. According to some critics (e.g., the philosopher Mario Bunge, 2010 ), this fact is enough to show the invalidity of Economic models. After all, if we start with a falsehood, how can we hope to find useful theories? The […]
Game Theory studies mathematical models of strategic decision. Historically, the first approach was to study games as interactions of perfectly rational individuals, who have complete and transitive preferences and who are intelligent enough to analyze the game. This is a normative approach: it states what to do if you accept that you and the others […]