AEC-RD 810

Preliminary Final Paper Outline

1. At least 2 pp., not more than 3. One page should be your SSP framework outline and another page a narrative. Keep your evolving SSP outline in front of you as you write your final paper.

2. Keep "SSP Impact Methodology" journal file from Period 17 in mind.

3. Keep the Final Paper Assignment directions below in mind.

4. Identify the goods and the type of situational interdependence it creates.

5. From theory, give examples of the institutional alternatives that direct the type of interdependence you have identified and the relevant performance variables.

6. Give an example of a testable hypothesis linking S, S & P using the format in PPPC, eg. italicized hypothesis in Ch. 6). What empirical study from our reading seems most relevant to support the hypothesis?

7. What behavioral regularities are most relevant in predicting performance.

Final Paper Assignment .

1. Pick a real public (group) choice situation where you have experience. It can be foreign or domestic; governmental or private group (e.g., church, club, dormitory association). You may embellish the real case with additional situational factual assumptions as you wish to permit yourself the opportunity to demonstrate your understanding of various sources of interdependence and other course concepts. You are not expected to spend a lot of time researching details of your case.

2. It could involve a change in the rules (like a court case or new legislation) or it may involve existing rules in which case, try to contrast the existing outcome with what you would expect under an alternative rule. Try to discover the rules that shape the choice you observe.

3. Make the paradigm (model) you are using explicit. State the linkages of the components (variables) of your paradigm as a series of testable hypotheses. Consider the handout entitled "SSP Impact Methodology Applied" and Shaffer's "Institutions, Behavior and Performance" from Period 2. Attach to your paper a one page SSP outline of the components (variables) found in your case following the format used in class and the attached excerpt from Samuels and Schmid, eds., Law and Economics, p. 78 (reserve, Main Library). The headings on your matrix need not be the same as the SSP example if you find some other construct more useful (explain). Use a horizontal outline format explicitly linking the case environment, particular situation (or combinations thereof) to alternative institutional structures and performance. Number the institutional alternatives (structures) and use the same number for the associated performance. Indicate the name of the physical good that goes with each situation and any characteristics of the environment and human behavior that you think are relevant. People, goods, and institutions matter.

4. Apply concepts from any of the readings to help you formulate predictive hypotheses as to the kind and direction of consequences you would expect from alternative rules. Consider public and private alternatives and variations within each. Use empirical material from PPPC Part IV and other readings where relevant. At least 2 pp. of your paper should describe case experience and methodology from our readings or other experience that support your hypotheses and how they could be tested. Use the PPPC subject index to look for relevant concepts and applications.

5. Remember our focus is institutional analysis (if this is not clear, see Schmid, "Analytical Institutional Economics," Amer. J. of Agr. Econ, Dec., 1972). We are asking how the rules affect whose preferences count and get reflected in performance (and even the evolution of preferences). We are not analyzing the physics of these choices (e.g., not the effect of a 55 mph speed on traffic accidents).--Though some rough idea of the production function may be presumed when identifying how the rules affect the interests of different groups which may be expressed in terms of final impact. When I say, predict the consequences of alternative rules, I don't mean the effect of 55 mph speed on death vs. a 75 mph speed. I mean, for example, the effects on behavior (speed actually driven) of alternative levels for speed limit administration (state, local, by a consolidated agency); is the opportunity to drive a private right protected by the courts; can it be traded; who bears the costs of accidents; what shapes the incentives of the policy and the judges, etc.? Don't choose cases that are primarily simple shifts in factor ownership or degree of competition.

6. You will need to note some of the interest groups who have a stake in these rules and try to predict how the alternative rules affect which groups count. In other words, if one of these (or all) groups hires you to inform it of which set of rules will further its interests, you should be able to help them. Then when they argue among themselves as to which rules should prevail, they can do it intelligently.

7. The purpose of the paper is to demonstrate what you have learned from the course. Everyone is not expected to have learned exactly the same thing. Therefore, the assignment gives you the responsibility of formulating the question to be addressed in the context of the course material.

8. Do not address normative issues of PPPC Chapter 11.

9. Prepare a cover page for your paper which includes a 70-80 word abstract. At the end, attach a full bibliography of any works cited using the style of a major journal in your field.

10. Remember that this is your final exam. Final exams usually don't cover all topics in a course, but constitute a reasonable sample. You are responsible for that sample which allows you to practice and show off you skills in applying a few major concepts.

    a. Select a case where the situation includes two or three sources of interdependence. Since the effects of  IUG are relatively straightforward and well understood, it should be a minor part of your paper. Remember that we have spent a lot of time showing that there is more to rights than factor ownership. The main focus should be on an inherent situation, but you may also include an institution (rule) as the good and examine the performance of alternative rules for making rules

    b. Explore and contrast the performance of at least two alternative rules (structures) for each situational feature of your case.

    c. Explicitly formulate hypotheses relating the components of your paradigm. (See italicized examples in PPPC, Chapter 6.)

    d. Use other empirical studies to warrant (support) your predicted performance. If you can't find an empirical case in our readings that parallels your case, perhaps you don't understand the theory or you need to argue that the theory is lacking.

    e. Consider both impact and institutional change analysis though you do not need to give equal weight to each. Be explicit when you are doing one or the other.

    f. Make your cognitive and behavioral model explicit.

11. Since the dominant style of writing in our profession is the journal article, write your paper as if it were to be submitted to a journal such as the Journal of Economic Issues, Journal of Socio-Economics, Public Choice and the Journal of Economic Psychology .

12. Maximum text length, 12 pp. double spaced, one inch margins all around, (page number may be outside the margin) 12 point font, exclusive of abstract, bibliography and one page SSP outline which shows the skeleton of your paradigm and hypotheses (the outline may be in smaller type). Leave the SSP outline loose so I can easily refer to it as I read your text. Grammar and spelling are not graded, but care in communication can't hurt. Above all, strive to make your paper interesting. Apply the following test--Hey, do I see and understand something in the economy I didn't before I started?

Check List:

a. Cover page and abstract.

b. Text.

    Did you include: Name of the physical good; Predictive hypotheses; Identification of stakeholders; Empirical evidence to support your hypotheses; Both impact and change analysis; An explicit model of cognition and behavior?

c. Bibliography. (not part of page limit)

d. SSP Outline (not bound or stapled to text). (SSP is a way to find the common elements in the variables suggested by all of the authors you have read even if the terms they use are different.)


For examples of excellent term papers, see the Working Papers by former 810 students Karin Steffens, Jeff Blend, Nancy Ojeda, or Greg Hadley on my web page.  I would like to put yours there next year.



An Illustration of the Situation, Structure and Performance Paradigm
of People
Sources of Interdependence. Commodity and interest groups noted Alternative Property Rights: 
Rules of the Game. 
Who Gets What 
Structure as actually 
Bounded rationality. 
Preferences/repertoire of 
C-D Gap.
I. Incompatible Use

a. In land between 
farmer and hunter. 


b. In air between 
industry and 

Distribution of Factor Ownership: 
1. Land may be posted and trespassers sued. 
2. Public hunting 

1. Breather may sue 
polluters. Tradeable 

2. Pollution prohibited by 
regulation, rights are 
not tradeable.


1. Hunters are excluded. 

2. Hunter hunts. Farmer has extern. 

1. Industry is excluded. Industry makes bids to 
farmers to acquire air rights. If some rights 
are sold, air quality 

2. Air stays clean to 
benefit of non-owner 
third parties.

II. Economies of Scale

In electricity - 

Business and residential users both want to pay MC.

1. Residences pay MC by administrative rule. 

2. Average Cost Pricing. 

1. Residences pay lower price than 
2. All consumers pay same price.
Based on excerpt from,
Samuels & Schmid, eds. Law & Economics, p.78.