economic assignment

The Paper- 1000 words in 5 days

As noted above, you are expected to write one short paper in this course, carrying a weight of 5% of your final grade. The paper is due on Tuesday, February 27th, and can be handed in class on that day. I will also accept papers up until 5 p.m. in my office. No extensions will be granted. If you hand your paper in after the deadlines, you will be penalized 8 marks for the first day and 4 marks for each subsequent day (papers are graded out of 100). Each "day" ends at 5 p.m. and Saturday and Sunday do not count. This is a harsh penalty, so do not turn papers in late. NOTE: Papers must be handed in printed - electronic submissions will NOT be accepted. You can hand papers in at class, or in my office (IC292).

Your papers must be no longer than 1000 words (about 3 typed double-spaced pages, using normal margins and normal print). Papers must be printed on one-side of the paper. Longer papers will be penalized. The penalty will increase with the amount that you exceed the limit (naturally, there will be no penalty for slightly exceeding 1000 words, but the point at which the penalty will be assessed is not specified). At the bottom of your paper you must state the number of words in your paper (Microsoft Word provides this information under Tools, subheading Wordcount; other wordprocessing packages also provide this information; you may omit the references from your wordcount if you like; be honest, because we have been known to count words!). You must double-space your papers and leave margins of at least 1 inch (2.5 cm) at the top, bottom, and on the right and left sides of the paper, and your paper must be printed on one-side of the paper. Again, there will be penalties for untyped papers or papers not conforming to spacing or margin requirements or for two-sided printing. They will be accepted, but will be penalized up to 8 marks (depending on the nature of the violation).

In general you do not have to do additional research for the paper (beyond what is in the text and in the assigned article). The paper is a “think-piece” and its purpose is to allow you to show your ability to compose a coherent argument about an assigned topic in Microeconomics. If you do read anything else that you use in your paper, you should of course provide complete references and footnotes (in fact, you should also provide a reference for anything you draw directly from the book or the assigned reading). Do not plagiarize. If you have trouble in writing, you can (and probably should) obtain help from the Writing Centre (check out [url removed, login to view])

Your assignment is to answer the general question of whether the theory of utility maximization and revealed preference is reliable in understanding the way consumers make decisions. You should begin by reading the article by John Beshears, James J. Choi, David Laibson, and Brigitte C. Madrian entitled “How Are Preferences Revealed?” This paper was published by the NBER and can be found at:

[url removed, login to view]

Begin your paper by briefly summarizing the argument in the assigned article about the failings of utility maximization theory to explain all consumer behaviour. Provide an example from your own life of a situation in which your actions (“revealed preference”) did not seem to be consistent with long run utility maximization. Provide an example of a public policy (not taken from the Beshears et al article) that addresses a failing in utility maximization theory. Conclude your paper by answering the question: “Should the argument you have developed cause us to reject standard microeconomic theories about consumer behaviour?”

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