1) Select ONE of the following: A) Valuation of “new” goods or goods not tradeable in markets B) Financial Markets 2) Discuss behavioral factors that are relevant to the application you selected; identify some ways in which behavioral factors influence overall activity in the area you discuss. Among the questions you should try to address: Do these behavior patterns violate any of the “standard assumptions” of economics? (For instance, do you think that people involved in these economic tasks behave irrationally?) Do you think that the behavior patterns suggest market inefficiency or some kind of systematic policy failure – Why or why not? 3) What measures would you suggest to mitigate any inefficiencies or failures associated with the issues discussed in (2); or, alternatively, what if any measures might you suggest to improve on the outcomes? (These may be regulations, policy reforms, survey design choices…be as specific as possible here!) Why would the measures you suggest be likely to address any problems? In this part, it will probably be helpful to discuss the ways in which the measures you recommend help address some of the issues associated with “System 1 – System 2” thinking. You should strongly consider drawing on at least some materials outside the texts used in the course. The texts from this class include: Thinking Fast and Slow by Daniel Kahneman Irrational Exuberance (3rd Ed.) by Robert Shiller Quasi Rational Economics by Richard Thaler For example, if you decide to write about financial markets, you might look at some newspaper reports about day-to-day activity in financial markets and identify behavioral influences (The Wall Street Journal and Bloomberg are good resources for this). If you take option A), you might examine an academic journal article or two. Please feel free to approach me with any questions you may have about outside sources. All formatting rules are the same as for the short papers. ____________________________________________________ Sourcing, Citation and Bibliography: Include a full works cited/bibliography section. Your bibliography style should be consistent and comprehensible, but the precise format you use does not matter. If you use direct quotation from any text or source, include an inline citation with author name and page number(s). For example: “[Quoted Material Here]” (Thaler p. 37). Grading Rubric: Style and Mechanics: 10%. Correct grammar, punctuation, and spelling. Writing flows well (‘readability’). If outside sources are used, citation should be thorough and comprehensible. Paragraphs and Organization: 15%. A clear overall structure and a logical sequencing of topics discussed. Paragraphs internally well-organized and focused. Transitions between topics should be smooth and logical. Use and Synthesis of Sources: 15%. Brought in relevant outside material. Appropriately linked ideas in course with sources. Thesis and Focus: 20%. Clearly stated in appropriate place(s), easily identifiable, and thoughtful. Arguments and evidence throughout are clearly connected to the thesis statement. Argument, Theory, & Evidence: 40%. Demonstrates an understanding of the important theoretical ideas. Uses understanding of ideas from the course to develop a coherent, thoughtful argument. Where appropriate, discuss how a particular piece of evidence tends to corroborate or refute a particular theory.