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Module 2 Resources: Incentives and Human Behavior

Interactive Simulations (McCreary)

These browser-based simulations let you explore Module 2 concepts hands-on. All simulations are from Dan McCreary's Introduction to Economics (CC BY-NC-SA 4.0).

Simulation What It Teaches Try It
Demand Curve Explorer Shift demand and supply to see how market equilibrium responds --- the aggregate result of strategic choices by buyers and sellers Open
Marginal Utility Meter See how satisfaction diminishes with each additional unit --- the rational basis for individual decision-making Open
Budget Constraint Explorer Move along the budget line to visualize trade-offs between two goods --- the choice set each player brings to a game Open
Elasticity Calculator Test how responsive buyers and sellers are to price changes --- essential for understanding pricing strategies Open
Diminishing Marginal Benefit Watch how the benefit of each additional unit declines --- the logic behind strategic decisions about "how much" Open

Economist Stories (McCreary)

Biographical narratives of economists whose work connects to this module's themes.

Economist Key Insight Read It
Friedrich Hayek --- Prices and Knowledge Prices as a communication system carrying distributed knowledge --- the information structure that strategic actors respond to Open
John Maynard Keynes --- Government and Markets Government intervention when strategic interactions among private actors produce collectively bad outcomes (coordination failures, liquidity traps) Open

Textbook Readings

Book Relevant Chapters / Sections
Dixit, A. & Nalebuff, B. (2008). The Art of Strategy Ch. 1--3: Introduction to game theory, Nash equilibrium, prisoner's dilemma
Akerlof, G. A. (1970). "The Market for Lemons" in Quarterly Journal of Economics The foundational paper on adverse selection and information asymmetry
Wheelan, C. Naked Economics Ch. 3: Incentives matter; Ch. 5: Information economics
Chang, H.-J. (2014). Economics: The User's Guide Ch. 5: Institutions and economic performance
Varoufakis, Y. Talking to My Daughter About the Economy Ch. 3--4: The role of debt and strategic interaction in markets
Staley, S. R. (2018). Contemporary Film and Economics Ch. on game theory films
Langlois, R. N. Economics Through Film (UConn) Dr. Strangelove unit: game theory, mutually assured destruction, strategic interaction

Videos

  1. "Nash Equilibrium --- Explained Simply" --- YouTube (Economics Explained), ~12 min. Clear walkthrough of Nash equilibrium using everyday examples.
  2. "The Prisoner's Dilemma" --- YouTube (Veritasium), ~15 min. An engaging exploration of why cooperation is hard and how it can be sustained.
  3. John Nash's Nobel Prize Lecture --- nobelprize.org, ~45 min. Nash explains his work on non-cooperative games and equilibrium in his own words.
  4. "Game Theory in Real Life" --- Marginal Revolution University, ~10 min. Applications of game theory to auctions, bargaining, and strategic competition.
  5. "What is Information Asymmetry?" --- Khan Academy, ~8 min. Clear introduction to adverse selection and moral hazard with accessible examples.

Indian Context

  • India's Informal Economy --- how information asymmetry and weak institutions shape informal labor markets
  • Digital India --- UPI and Aadhaar as institutional mechanisms that reduce information asymmetry and transaction costs
  • GST and Markets --- how institutional reform (a unified tax system) changes the strategic landscape for firms

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