Week 15 · Readings & resources

Week 15 — Readings & Resources

Principles of Microeconomics Free sample edition

Your primary reading is Chapter 15 (in this module). Everything below is the optional, go-deeper layer — pick what helps, skip the rest.

How to use this page

This page has 11 items (5 readings and 6 videos). Allow 55–70 minutes for everything. Each group points back to the matching chapter section and class-session segment, so use the full menu when you want more, or take the quick path below.

Every video here has captions: turn them on with the CC button in the player. The chapter covers the same ideas in text.

Pick-one quick path (18–21 min total)

① When one side knows more: lemons, signals, and hidden actions

Chapter 15, Section “Follow the market as it unravels” · Session 1, Segment 2, “The lemons market” · Remember: when buyers cannot see quality, an average offer is too low for good cars, so good cars stay home and lemons are what get sold.

Market for Lemons II — Economics in Many Lessons — a worked problem with two kinds of used car: buyers would pay 2,000 dollars for a lemon and 4,000 for a good car, and sellers want at least 1,500 and 3,000. A buyer who cannot tell them apart offers a weighted average of the two values, so the offer falls as the share of lemons rises; when three-quarters of the cars are lemons it is 2,500, below what good-car owners need, and no good cars sell. Its last example lets both sides see quality, and each kind of car then sells at a price between the buyer's value and the seller's minimum, the trade the chapter's warranty and inspection bring back. Its numbers are the video's own, not Dataset R. This builds on Week 6's work with consumer and producer surplus, since every good car that stays home is a trade worth making that never happens. (video, 4 min) (captions: automatic)
The 2001 Prize in Economic Sciences: Popular information — nobelprize.org — the prize committee's plain-language explanation of the research behind this week's first idea. Read the opening "Markets with Asymmetric Information" section and the section on Akerlof, which describes the used-car market and calls dealer guarantees and brands responses to hidden quality; then read the next section, on signaling, the idea that a costly action can reveal what one side knows. Skip the later sections on finance and the long technical discussion. (reading, 8–12 min)
Buying a Used Car From a Dealer — Federal Trade Commission, Consumer Advice — the agency's consumer guide to the Buyers Guide window sticker that dealers must post on used cars, saying whether a car is sold "as is" or with a warranty. Read the sections on the Buyers Guide and on getting an independent inspection, and sort what you find into this week's terms: a dealer's warranty is a signal, and a mechanic's inspection is screening. The page carries its own revision date, so check it before relying on any rule it describes. Use this example while completing the Week-15 module overview. (reading, 5–8 min)
Insurance — Council for Economic Education — a four-minute explainer on how insurance moves a household's risk to an insurer that pools many people's premiums. Two parts connect to this week. Insurers set each premium by studying the buyer's risk, a form of screening by the less-informed side. And a deductible, the part of a loss you pay first, lowers the premium partly because people take fewer risks when they must pay part of a loss themselves: the chapter's moral hazard and its most common response. The video never uses the term, so apply the timing test yourself: the care you take after buying a policy is a hidden action after the deal. Its premium and coverage figures are the video's own examples. (video, 4 min) (captions: automatic)

② How real people choose: patterns and defaults

Chapter 15, Section “Set the default: the power of defaults” · Session 1, Segment 4, “Behavioral patterns and defaults” · Remember: real choosers lean on rules of thumb in predictable ways, and a default changes the starting point without taking any option away.

Behavioral Economics: Crash Course Economics #27 — CrashCourse — a fast tour of bounded rationality, how a price can change how a good is judged, the framing of the same choice two ways, and loss aversion, the idea that losses hurt more than equal gains please. The hosts call people "irrational" more than once; this course prefers to say "predictably different from the careful chooser," which is the same point said more carefully. Skip the stretch on investment bubbles and the 2008 financial crisis, which belongs to the macroeconomics course. When the video says nudges work, treat that as a positive claim evidence can test, and whether a government should use them as a normative one. (video, 11 min) (captions: creator)
The Anchoring Effect: How You Get Tricked Into a Bad Deal — Quik Economics — a short explainer on anchoring, the pull of the first number you see, with two classroom experiments and a pair of subscription offers in which a cheaper first option makes the second look like a bargain. Its experiment results and prices are the video's own, not the course's. The question it ends on is the chapter's: is the item worth the price on its own, whatever the first number said? (video, 3 min) (captions: automatic)
Retirement topics: Automatic enrollment — Internal Revenue Service — the tax agency's short page on automatic enrollment in workplace retirement plans, the kind of default the chapter's 401(k) study examined. Read the opening paragraphs, which say the employer deducts contributions unless the employee chooses not to, and that the employee must be given that option before anything is withheld: a default changes the starting point, and the choice stays open. Skip the plan-design details for employers. (reading, 3–5 min)

③ Measuring who gets what: the Lorenz curve and the Gini coefficient

Chapter 15, Section “Compute the Gini coefficient” · Session 2, Segment 6, “The Lorenz curve and the Gini coefficient” · Remember: a Lorenz curve plots running totals of income shares, and the Gini coefficient measures how far it sags below the line of equal shares, from 0 to 1.

The Gini Coefficient Explained in One Minute — One Minute Economics — a two-minute walk from sorting incomes from lowest to highest, to plotting cumulative shares as a Lorenz curve, to comparing the gap below the diagonal with the whole triangle under it. It states the scale the chapter uses, 0 for perfect equality and 1 when one person gets everything, and ends with two cautions. That the Gini says nothing about the causes of inequality matches the chapter; its claim that a Gini measures only income goes too far, since a Gini can be computed for wealth as well, although the figures this week, like the Census Bureau's, measure income. (video, 2 min) (captions: automatic)
Understanding the Gini Coefficient — Singapore Department of Statistics — a national statistics agency's animated explainer that builds the Lorenz curve from households ranked by income and names the two areas the chapter uses: the gap between the line of perfect equality and the curve, and the area under the curve. Watch through the part on why comparing Gini coefficients across countries is not straightforward; the closing section on adjusting incomes for household size goes beyond this course. (video, 5 min) (captions: automatic)
Gini Index — U.S. Census Bureau — the Census Bureau's own definition of the Gini index, the same definition this week uses. In a few sentences it says the coefficient summarizes the dispersion of income in one number, runs from 0 for perfect equality to 1 for perfect inequality, and is based on the difference between the Lorenz curve and a perfectly equal distribution. Any real Gini figure you find on Census pages comes with its own year; this course grades none of them. (reading, 2–4 min)

Optional one-stop reference (free online reference)

Behavioral Economics — Concise Encyclopedia of Economics, Econlib — a signed reference entry on how behavioral economics modifies the standard model's careful chooser. Read the opening on bounded rationality and self-control, then the section on saving, which describes the switch to automatic enrollment in a 401(k) plan that the chapter's default study examined. Skip the long middle section on financial markets, which belongs to a different course. (reading, 8–12 min)

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