Part D | Strategic Interaction
Strategic interaction often leads to inefficient marketsPart D pushes beyond market failures to explore situations where markets aren't even the right framework. Here we encounter public goods and common resources—goods that are entirely externalities with no private component. These situations demand a completely different approach: strategic thinking and game theory. You'll discover why cooperation is sometimes impossible even when everyone would benefit, and how understanding these dynamics reveals the hidden logic behind everything from environmental policy to international relations.
Block D1 | Common Resources
Common resources create market failures through the tragedy of the commons—when shared resources are overused because private incentives don't align with social benefits.
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Exercise D1 in class
Block D2 | Public Goods
Public goods create free-rider problems because they are non-excludable and non-rivalrous, leading to under-provision by private markets and the need for government intervention.
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Exercise D2 in class
Block D3 | Game Theory
Strategic interaction and Nash equilibrium provide a framework for analyzing decisions when outcomes depend on what others do, revealing why cooperation often fails even when it would benefit everyone.
Episode D3 Baby game theory
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Veritasium Game Theory optional
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Exercise D3 in class
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Vignette D3 recitation
Block D4 | Voting
Voting systems and collective choice reveal how individual preferences aggregate into social decisions, often leading to paradoxes and inefficiencies in democratic decision-making.
Episode D4 Voting and collective choice
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Exercise D4 in class
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Vignette D4 recitation
Checkpoint D
Checkpoint D covers everything in Part D. You will begin to learn that if you understand the concepts and do the work in the Vignettes, Homework, and Demo, you're going to be in good shape on the Checkpoint.
