Class 7: Advanced Microeconomics

September 21, 2016

Learn how the case of quantal response is described by the use of the social interaction model and receive an introduction to classical political economy.

SCEPA and INET are proud to present an online economics class - advanced microeconomics - taught by Duncan Foley, the Leo Model Professor of Economics at The New School. The series includes videos of 14 class lectures, including Professor Foley's presentations and discussions with students.

Class 07: Entropy-Constrained Behavior in the Social Interaction Model

The lecture begins with a presentation of a way to reach equilibria in the social interaction model with the entropy-constrained behavior. The best response does not necessary make everyone act in the same way, but people’s behavior depends on their behavior temperature, which determinates the probability of them choosing the best response. The model is enriched with graphical illustrations along with examples that clarify the functions of this model. In the second part, the social interaction model is applied in the classical political economy, emphasizing mainly on Adam Smith’s theory. The main question of this part is if the social coordination outcome is technically feasible in the hub-and-spoke model, in which all producers specialize and share their output equally, or in other words, to what extent the spontaneous socialism is feasible.

Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 07 Entropy-constrained Behavior in the Social Interaction Model | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research | Spring 2016