Course: Principles of Microeconomics (ECON 1) · Silver Oak University (fictional sample) · Prof. Kessler
Focus: Asymmetric Information, Behavioral Economics & Inequality · Objective 8 · SLO A & B

📋 Module Overview Page — "Start Here" (Canvas: Page, published)

Week 15 — Asymmetric Information, Behavioral Economics & Inequality

We end the micro arc with three ideas that complicate the standard model in powerful ways: what happens when one side of a deal knows more than the other, why people don't always choose the way textbooks predict, and how economists measure and think about inequality. These aren't exotic exceptions — they're why used-car markets unravel, why health insurance is mandatory, and why "irrational" behavior is systematic enough to predict.

The big question: When information is lopsided, when psychology hijacks rational choice, and when gains are distributed very unequally — what does economics say, and what should we do about it?

By the end of this week, you can:

• distinguish adverse selection (hidden info before a deal) from moral hazard (hidden action after) — and explain why the difference matters;
• walk through the lemons problem: compute a buyer's expected value (½ · $4,000 + ½ · $2,000 = $3,000), see why sellers of good cars exit, and explain how the market unravels through adverse selection;
• explain how signaling and screening reduce information gaps;
• name and apply five behavioral biases — anchoring, loss aversion, sunk-cost fallacy, present bias, and framing — and assess the nudge debate evenhandedly;
• read a quintile income-share table (4 / 9 / 15 / 22 / 50%), compute the top-to-bottom ratio (50 ÷ 4 = 12.5×), and keep the positive question (what inequality looks like) separate from the normative question (how much is "too much").

Do this, in order:

1. Read & watch — the Week 15 resources (≈40 min). → Readings & Resources page
2. Lecture Tutorial — work through asymmetric information, behavioral biases, and inequality with your AI tutor (≈45 min). Due Sun, Dec 13. → submit the chat share link + summary
3. Practice Exercises — 6 quick reps, ungraded (≈15 min).
4. Quiz 15 — 10 questions, closed to AI (≈20 min). Due Sun, Dec 13.
5. Discussion 15 — behavioral nudges: smart policy or paternalism overreach? Initial post Fri, Dec 11, replies Sun, Dec 13.
6. Assignment 15 — the asymmetric information & inequality problem set (100 pts). Due Sun, Dec 13.
7. Workshop 15 — Graph & Model Workshop — the lemons model and the quintile table (50 pts). Due Sun, Dec 13.

A note before the final stretch: this is the last instructional week before finals. The concepts here — information failures, behavioral regularities, distributional patterns — are among the most actively debated in economics today. There's genuine disagreement, and that's the point: keeping the positive and normative parts separate (a skill you've been building all term) is exactly how economists stay honest in that debate. Strong work this term. Let's finish it well.

📣 Welcome Announcement (Canvas: Announcement; available_from_offset_days = 0 — posts Sun, Dec 7)

Subject: Week 15 — the last lap before finals

Hi everyone,

We've arrived at Week 15 — one more full instructional week before the final exam. This week completes Objective 8 and rounds out the course.

The three ideas that close our micro story:

• Asymmetric information — when buyers and sellers know different things, markets can fail in a predictable way: the lemons problem. We'll compute the math and trace the unraveling.
• Behavioral economics — people don't always maximize perfectly. Anchoring, loss aversion, sunk costs, present bias, and framing are systematic deviations from the standard model — predictable enough to design policy around, and controversial enough to debate.
• Inequality — economists can describe the income distribution precisely (quintile shares, the Lorenz curve, the Gini coefficient). Whether the outcome is too unequal is a normative question — and a genuinely contested one.

Start with the Module Overview ("Start Here"), then the readings, then your AI Lecture Tutorial. Quiz 15 is closed to AI, so use the tutorial and workshop to lock in the ideas first.

See you in class for our last lecture session,
Prof. Kessler