The theme of Nobel-Prize winning economics running through this textbook demonstrates the degree to which cutting-edge work has informed developments in economic theory in very business-relevant contexts.
The global economic crisis
Watch the video below to find out what the perspectives of Nobel Laureates such as Joseph Stiglitz (2001), Christopher Pissarides (2010), Robert Mundell (1999), Daniel McFadden (2000) and Roger Myerson (2007) are on the major causes of the global economic crisis and its effects:
Now look back at the following pages of your textbook:
Chapter 1, pp. 29-31– Look over the discussion of the UK government's response to the credit crunch and its aftermath and the examination of the notion of moral hazard in banking
Chapter 3, pp. 114-17– Think about the discussion of the Lehman Brothers' debacle and the issues of asymmetric information and moral hazard
p286 –Paul Krugman on the Macroeconomics of a Space Alien Invasion
Chapter 9, p. 311 – Look over the 'Applying Economics to Business' feature for more on the UK's response to the 2008-09 recession
Chapter 15, pp. 492-5– Read the section on the contribution to the financial crisis made by a world economy out of balance.
Behavioural Economics
Watch the video below which explores the relatively new field of behavioural economics from the point of view of young economics researchers and Nobel Laureates:
Now look back at the following pages of your textbook.
Chapter 2, pp. 81-3 – Read this introduction to Kahneman and Tversky's notion of anchoring in consumer behaviour, and the discussion of Schelling's challenge to the more-consumption-is-better basis of rational behaviour
Chapter 3, pp. 100-2 – Look over this overview of 'sub-rational' behaviour by firms and read the ‘Applying Economics to Business’ feature on Herbert Simon's 'satisficing' behaviour by firms
Chapter 3, p. 112 – Look at the Business Case Study here on optional insurance on electronics that uses the behaviourist's endowment effect.
Note: These videos were short on location at the 2011 Lindau Meeting in the Economic Sciences and were put together by Palgrave Macmillan, Nature Video, and Worth Publishers in collaboration with the Meetings of Nobel Laureates at Lindau. Additional films of lectures recorded at the 2011 Meeting can be viewed by visiting the Linda Mediatheque at www.mediatheque.lindau-nobel.org.
The Nobel Laureates and their work
For more information on many of the Laureates featured in these videos and the work which won them a Nobel accolade see the following pages of the textbook:
George Akerlof (2001) See chapter 2: pp. 78-79, chapter 3: pp 110-111 and chapter 10: p. 323 for discussions of his work on asymmetric information.
Joseph Stiglitz (2001) See chapter 3: pp. 110-111 and chapter 15: p. 499 for content related to his work on asymmetric information and his thoughts on how globalization can work better.
Thomas Schelling (2005) See chapter 2: p. 82-3 and chapter 5: p. 178 for information on game theory and behavioural economics which come out of his work.
Michael Spence (2001) See chapter 7: p. 243 to read about his insights into asymmetric information in the labour market.
Robert Mundell (1999) See chapter 14: p. 470 to review his work on optimum currency areas.
Paul Krugman (2008) See chapter 8: p. 286, chapter 11: p. 350-1, chapter 12: p. 391 and chapter 13: p. 406 for discussions of his New Trade Theory (NTT).
Finn Kydland (2004) and Edward Prescott (2004) See chapter 11: p. 360 and chapter 12: p. 382-3 to review their work on time inconsistency in macroeconomic policymaking.
Bertil Ohlin (1977) See chapter 13: pp. 402-404 and p. 406 for content on the Heckscher-Ohlin trade theory.
Wassily Leontief (1973) See chapter 13: pp. 403-404 to read the section on the Leontief paradox.
Herbert Simon (1978) See chapter 3: pp. 101 for a discussion of behavioural decision making in firms.
Robert Solow (1987) See chapter 11: pp. 346-8, p. 363 and pp. 366-71 for information on his work on economic growth.
Ronald Coase (1991) See chapter 3: p. 91-2 and chapter 6: pp. 204 to read about his work on transaction costs and the Coase theorem.
Daniel Kahneman's (2002) See chapter 2: p. 81 for material on his contribution to behavioural economics.
Robert Merton (1997), James Mirrlees (1996), James Heckman (2000) and Amartya Sen (1998) See chapter 1: p. 32-3 for the 'Reflecting on Economics' box in which they discuss why they became economists.
Milton Friedman (1976) See chapter 1: p. 32-3, chapter 6: p. 209, chapter 8: p. 274 and p. 283-4, chapter 9: p. 300-1, chapter 10: pp. 323-29, chapter 11: p. 356-58, chapter 12: p. 378 and chapter 14: p. 451 for sections on a his work on inter alia the expectations-augmented Phillips curve and the case for flexible exchange rates.
Robert Lucas Jr. (1995) See chapter 9: p. 302, chapter 11: p. 358 and chapter 12: pp. 384-6 for discussions of his work on rational expectations and the Lucas critique.
Edmund Phelps (2006) See chapter 10: p. 323 for a review of his work on the expectations-augmented Phillips curve.
