CHAPMAN UNIVERSITY Vernon L. Smith & Bart J. Wilson Economic Science Institute Orange, CA (714) COURSE SYLLABUS

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1 CHAPMAN UNIVERSITY Vernn L. Smith & Bart J. Wilsn Ecnmic Science Institute Orange, CA (714) COURSE SYLLABUS Hnrs 357/Ecnmics 420 Fall 2010 Fundatins f Ecnmic Exchange Restrictins: Nne Catalg Descriptin: Prerequisites: Nne: Classical and neclassical thery f ecnmic exchange. Philsphical critiques and cmmendatins f market exchange. Human nature as self-regarding in market exchange and ther-regarding in scial exchange. Prperty right systems in ecnmic exchange. (Offered fall semester.) 3 credits. Curse Objectives: Frm the perspectives f tw frms f ratinal rders, cnstructivist and eclgical, this curse will study the fundatins f ecnmic and scial exchange. We will examine the extent t which (1) reasn and the deliberate actin f a cnstructivist rder, r (2) the un-designed principles f nrms and traditins in an eclgical rder can infrm ur understanding f impersnal exchange in markets and persnal scial exchange with friends, neighbrs, and family. Required Texts: F.A. Hayek. The Fatal Cnceit. Chicag: University f Chicag Press, J. Surwiecki. The Wisdm f Crwds. New Yrk: DOUBLEDAY, M. Ridley. The Origins f Virtue. New Yrk: Penguin, Yu shuld purchase a 2-inch three ring binder fr the ther readings available n electrnic reserves. Students are expected t bring cpies f the readings with them t class. Essential Facility: Access t cmputer lab Majr Study Units: Exchange as the fundatin fr specializatin and markets Cnstructivist and eclgical lenses fr understanding wealth creatin Knwledge fundatins f market exchange Self-interest fundatins f market exchange

2 2 Other-interest fundatins f scial exchange Bilgical and cultural fundatins f scial exchange Prperty rights as a fundatinal f scial rders Cnstructivist and eclgical ratinality in ecnmic systems Instructinal Methds: This curse uses a cmbinatin f hands-n learning in labratry experiments and Scratic rundtable discussins f readings. In additinal t the recent research, the readings range frm wrks by 18th century Scttish philsphers Adam Smith and David Hume t 19 th century marginal utilitarian Jevns and 20th century Nbel ecnmist F.A. Hayek. The students will write an riginal prpsal fr an experiment t address an unanswered questin raised in class and will present the prpsal t the class. Evaluatin: 1. Participatin in class discussins (15%) 2. Labratry experiments (15%) 3. Blg psts and cmments (30%) Minimum ne pst/cmment per week; at least half must be psts. 4. Final paper and presentatin (40%) Additinal Requirements fr Graduate Curses: N/A Students with Disabilities In cmpliance with ADA guidelines, students wh have any cnditin, either permanent r temprary, that might affect their ability t perfrm in this class are encuraged t cntact the Disability Services Office. The Disability Services Office will wrk with the apprpriate faculty member wh is asked t prvide the accmmdatins fr a student based n the dcumentatin and the individual student needs. The granting f any accmmdatin will nt be retractive and cannt jepardize the academic standards r integrity f the curse. Chapman University Academic Integrity Plicy Chapman University is a cmmunity f schlars, which emphasizes the mutual respnsibility f all members t seek knwledge hnestly and in gd faith. Students are respnsible fr ding their wn wrk, and academic dishnesty f any kind will nt be tlerated anywhere in the university. Bibligraphy: Bernasek, Anna. The Ecnmics f Integrity. New Yrk: HarperBusiness, Bernstein, William. A Splendid Exchange: Hw Trade Shaped the Wrld. New Yrk: Atlantic Mnthly Press, Cunliffe, Barry. Eurpe Between the Oceans: 9000 BC AD New Have, CT: Yale University Press, Ellicksn, Rbert. Order Withut Law. Cambridge, MA: Harvard U Press, Ellicksn, Rbert, A Hypthesis f Wealth-Maximizing Nrms: Evidence frm the Whaling Industry, Jurnal f Law, Ecnmics, & Organizatin, 5(1), 83-97, 1989.

3 3 Gdall, Jane. Order withut Law in Law, Bilgy, & Culture: The Evlutin f Law. M. Gruter and P. Bhannan, editrs. Santa Barbara: Rss-Ericksn, F.A. Hayek, Cmpetitin as a Discvery Prcedure in The Essence f Hayek, Chapter 13. Stanfrd, CA: Hver Institutin Press, Hayek, F.A. The Use f Knwledge in Sciety, American Ecnmic Review, 35(4), , Hume, David. A Treatise f Human Nature F. Nrtn and D. Nrtn, editrs. New Yrk: Oxfrd University Press, Jevns, W. Stanley. The Thery f Plitical Ecnmy New Yrk: A. M. Kelley, Kimbrugh, Erik, Smith, Vernn, and Wilsn, Bart. Building a Market: Frm Persnal t Impersnal Exchange, in Mral Markets: The Critical Rle f Values in the Ecnmy, P. Zak, editr. Princetn, NJ: Princetn U Press, Mandeville, Bernard. The Fable f the Bees and Other Writings. E. Hundert, editr. Indianaplis: Hackett Publishing C., Marx, Karl. Capital: A Critique f Plitical Ecnmy Available nline at McCabe, Kevin, Rigdn, Mary, and Smith, Vernn. Psitive Reciprcity and Intentins in Trust Games, Jurnal f Ecnmic Behavir and Organizatin, 52, , Nietzsche, Friedrich. The Gay Science. W. Kauffmann, translatr. New Yrk: Vintage, Nietzsche, Friedrich. Basic Writings f Nietzsche. W. Kauffmann, translatr. New Yrk: Mdern Library, Ridley, Matt. Nature via Nurture. New Yrk: Harper, Cllins, Ridley, Matt. The Origins f Virtue. New Yrk: Penguin Bks, Rigdn, Mary, McCabe, Kevin, and Smith, Vernn. Sustaining Cperatin in Trust Games, Ecnmic Jurnal, 117, 991,-1007, Smith, Adam. Wealth f Natins Available nline at: Smith, Adam. The Thery f Mral Sentiments Available nline at: Smith, Vernn. Human Nature: An Ecnmic Perspective, Daedalus, 133(4), 67-76, Smith, Vernn. Markets as Ecnmizers f Infrmatin: al Examinatin f the Hayek Hypthesis, Ecnmic Inquiry, 20(2), , Smith, Vernn. The Tw Faces f Adam Smith, Suthern Ecnmic Jurnal, 65(1), 1-19, de Waal, Frans B. M. Hw Animals D Business, Scientific American, 292(4), 54-61, Prepared by: Bart J. Wilsn, Fall Term, 2008 Last revised by: Bart J. Wilsn, Fall Term, 2010

4 4 Tentative Curse Schedule and Outline Mnday, 8/30 Organizatin Wednesday, 9/1 William J. Bernstein. A Splendid Exchange: Hw Trade Shaped the Wrld, Chapter 3: Camels, Perfumes, and Prfits. Barry Cunliffe. Eurpe Between the Oceans: 9000 BC AD 1000, Chapter 7: Taking t the Sea Crssing the Peninsula: BC. Mnday, 9/6 Hliday Wednesday, 9/8 Adam Smith, Wealth f Natins: Bk I, Chapters I-III. David Hume, Essays, Mral, Plitical and Literary, Of the Jealusy f Trade. Matt Ridley, The Origins f Virtue Chapter 2: The Divisin f Labur (In which self-sufficiency prves t be much verrated) Mnday, 9/13 Chapter 10: The Gains frm Trade (In which exchange makes tw plus tw equal five) Wednesday, 9/15 Karl Marx, Capital: A Critique f Plitical Ecnmy, Vl. I, Part I, Chapter I, Sectin IV, The Fetishism f Cmmdities and the Secret Theref Karl Marx, Capital: A Critique f Plitical Ecnmy, Vl. III, Part III, Chapter XV, Paragraphs Vernn Smith, Markets as Ecnmizers f Infrmatin: al Examinatin f the Hayek Hypthesis, Ecnmic Inquiry, April 1982: Sectins I-III. F.A. Hayek, The Use f Knwledge in Sciety, American Ecnmic Review, September, Mnday, 9/20 Wednesday, 9/22 W. Stanley Jevns. The Thery f Plitical Ecnmy, Chapter 4 (Definitin f a Market; Definitin f Trading Bdy). F.A. Hayek. Cmpetitin as a Discvery Prcedure, The Essence f Hayek, Chapter 13. F.A. Hayek. The Meaning f Cmpetitin, Individualism and Ecnmic Order, Chapter V. Mnday, 9/27 James Surweicki. The Wisdm f Crwds, Intr & Chapters 1-4.

5 5 Wednesday, 9/29 David Hume, A Treatise f Human Nature: Bk III, Of Mrals, Part I, Of Virtue and Vice in General. Matt Ridley, The Origins f Virtue Chapter 3: The Prisner s Dilemma (In which cmputers learn t cperate) Mnday, 10/4 Chapter 4: Telling Hawks frm Dves (In which develping a gd reputatin pays) Wednesday, 10/6 David Hume, A Treatise f Human Nature: Bk III, Of Mrals, Part II, Of Justice and Injustice, Sectins I-VI. Mnday, 10/11 Rbert Ellicksn, A Hypthesis f Wealth-Maximizing Nrms: Evidence frm the Whaling Industry, Jurnal f Law, Ecnmics, & Organizatin, Matt Ridley, The Origins f Virtue Chapter 11: Eclgy as Religin (In which living in harmny with nature prves harder than expected) Chapter 12: The Pwer f Prperty (In which gvernments are fund wanting) Wednesday, 10/13 Adam Smith, The Thery f Mral Sentiments: Part I, Sectin I, Chapter I, Of Sympathy. Mnday, 10/18 Part III, Chapter I, Of the Principles f Self-apprbatin and f Self-disaspprbatin Part VI, Sectin II, Intrductin and Chapter I, Of the Order in which Individuals are Recmmended by Nature t Our Care and Attentin Matt Ridley, The Origins f Virtue Chapter 7: Theries f Mral Sentiments (In which emtins prevent us being ratinal fls) Wednesday, 10/20 Kevin McCabe et al. Sustaining Cperatin in Trust Games, Ecnmic Jurnal, Kevin McCabe et al. Psitive Reciprcity and Intentins in Trust Games, Jurnal f Ecnmic Behavir and Organizatin, Octber, Matt Ridley, The Origins f Virtue Chapter 13: Trust (In which the authr suddenly and rashly draws plitical lessns) Mnday, 10/25 Friedrich Nietzsche, On the Genealgy f Mrals, Secnd Essay: Guilt, Bad Cnscience and the Like, Sectins 1-9. Friedrich Nietzsche, The Gay Science, Sectin 21: T the teachers f selfishness. Adam Smith, The Thery f Mral Sentiments: Part VII, Sectin II, Chapter 4, Of Licentius Systems

6 6 Part VII, Sectin III, Intrductin and Chapter I, Of thse Systems which deduce the Principle f Apprbatin frm Self-Lve. Bernard Mandeville, The Fable f the Bees (we ll read this ut lud in class) Wednesday, 10/27 Due dates fr Papers and Presentatins are Set Mnday, 11/1 Vernn Smith, The Tw Faces f Adam Smith, Suthern Ecnmic Jurnal, Tdd L. Cherry et al., Hardnse the Dictatr, American Ecnmic Review, Rbert Ellicksn, Order Withut Law, Chapter 3: The Reslutin f Cattle-Trespass Disputes. Wednesday, 11/3 Frans B. M. de Waal, Hw Animals D Business, Scientific American, April Jane Gdall, Order withut Law in Law, Bilgy, & Culture: The Evlutin f Law, eds. M. Gruter and P. Bhannan. Matt Ridley. Nature via Nurture, Chapter 8: Cnundrums f Culture. Mnday, 11/8 F.A. Hayek. The Fatal Cnceit, Chapters 1-3. Wednesday, 11/10 F.A. Hayek. The Fatal Cnceit, Chapters 4-6. Mnday, 11/15 Wednesday, 11/17 Erik Kimbrugh, Vernn Smith, and Bart Wilsn, Building a Market: Frm Persnal t Impersnal Exchange, in Mral Markets: The Critical Rle f Values in the Ecnmy, ed. P. Zak. Anna Bernasek. The Ecnmics f Integrity, Chapter 7: Trading n Yur Wrd. Mnday, 11/22 Wednesday, 11/24 Hliday Mnday, 11/29 James Surweicki. The Wisdm f Crwds, Chapters 5-7.

7 7 Wednesday, 12/1 James Surweicki. The Wisdm f Crwds, Chapters Student presentatins and Paper Due Dates (Plan Nw; Dates are Set n 10/27) Mnday, 12/6 Wednesday, 12/8 Mnday, 12/13 frm 10:45am-1:15pm