Lesson Report:
## 1) Title
**Midterm Prep: Diagnosing Policy Problems via Market Failures (Externalities, Information Asymmetry, Voluntarism, Rationality)**
This session functioned as a targeted midterm review focused on the two core exam skills: (1) separating *grievances/conditions* from *policy problems*, and (2) diagnosing *why the market has not solved the problem* (i.e., identifying the relevant market failure). The class also clarified midterm expectations and logistics (one case dossier, closed notes, argument quality over “right answers�), and previewed that stakeholder-perspective work and the policy cycle will return after the midterm break.
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## 2) Attendance
– **Absent mentioned:** 0
– No students were explicitly stated as absent in the transcript.
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## 3) Topics Covered (Chronological, with detailed activity flow)
### A. Midterm Check-In: Preparedness, Scope, and What the Exam Is Testing
– Instructor solicited a quick “readâ€� on student preparedness and highlighted that **rationality** is perceived as the hardest market failure category; instructor committed to emphasizing it during review.
– **What students will *not* be asked to do on the midterm:**
– No requirement to **prescribe solutions** (“here’s how to fix itâ€�)—solution design is positioned as **second-half-of-course** material.
– Not expected to quote the textbook or provide page numbers.
– Not expected to use highly technical jargon beyond the core terms used in class.
– **What students *will* be asked to do on the midterm (core performance objectives):**
– Read a **real-world case dossier** (news report / quotes / text).
– **Extract “grievancesâ€�** from the text.
– Decide which grievances are **conditions** vs. **policy problems**.
– For grievances judged to be policy problems: identify **why the market has not fixed it** → diagnose the **market failure** requiring government intervention.
– **Vocabulary expectations clarified:**
– Students should competently use foundational course vocabulary (e.g., **rationality, information asymmetry, voluntarism, externalities**).
– Instructor does not plan to test “smallerâ€� vocabulary in isolation, but inability to use core terms appropriately will hurt performance.
– **Policy cycle (policy circle) explicitly deferred:**
– Students asked whether agenda-setting / policy cycle stages would be needed on the midterm; instructor said **no**.
– The course will **return to policy cycle/problem statements** after midterm break.
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### B. Framing: Conditions vs. Policy Problems Is Argument-Based (No Universal Checklist)
– Students asked for clearer rules to reduce confusion between conditions and policy problems.
– Instructor explained:
– There is **no universal checklist**; public policy is too context-dependent.
– Grading emphasis will be on **how convincingly students argue** that something is a policy problem (using evidence/logic tied to market failure), not on matching a single “correctâ€� category.
– Discussion about professional practice:
– In real policy jobs, organizations often impose **their own frameworks and priorities**.
– After spring break, class will more explicitly focus on **stakeholders** and adopting stakeholder perspectives.
– Preview of later course deliverables:
– **Final assignment** will be a **policy memo + defense**, requiring:
– identification of stakeholders,
– proposing a solution,
– assessing **feasibility** (likelihood the policy works in real conditions).
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### C. Midterm Case Structure & Answer Strategy Clarifications
– **Single case dossier** on the midterm:
– Students requested multiple cases to choose from; instructor said there will be **one case** for grading feasibility (to avoid having to grade many different contexts).
– Instructor aims to make the case **“universally applicableâ€�** and not detail-tricky.
– **Choosing one diagnosis (even if multiple apply):**
– Students asked if they can write two answers if unsure.
– Instructor said:
– Time constraints make two deep analyses unrealistic in 70 minutes.
– Students will be required to **choose one** diagnosis, mirroring real-world decision-making under uncertainty.
– Instructor acknowledged that in reality failures can be mixed, but for the midterm students must **argue for one primary failure** to demonstrate reasoning skills.
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### D. Course Administration: Communication Policy Change (Telegram Ended)
– Instructor announced: **no more Telegram/WhatsApp/group chat communication** due to instruction/policy requiring communications through official channels.
– Future collaboration to be done through:
– **Email**, **e-course**, and/or **Google Docs** (exact workflow TBD).
– Students referenced a **new student code**; instructor encouraged reading it and reiterated communication restrictions.
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### E. Transition to Group-Based Continuity (Housekeeping + Group Papers)
– Students were asked to sit with the **same groups as last week** (policy groups).
– Instructor called out group/team names and members while distributing/locating papers:
– **“Policy makers of the futureâ€�**: Ali Junia, Danieke, Garib Sultan (as read from transcript).
– **“Public policy prosâ€�**: Darina, Kyle, Azirid.
– Another group listed by names: **Adelia, Sandatan, Erhan** (team name unclear in transcript).
– **“ICP girliesâ€�** group mentioned.
– A brief confusion occurred regarding a **missing group paper**, resolved when it was found.
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### F. Main Content Review: Market Failures (External vs. Internal)
The instructor reviewed market failures as the “most complex� part of the unit and the primary focus before the midterm.
#### 1) External Market Failure: Negative Externalities (with Public Goods Link)
– Instructor framed markets as usually imagined as a two-party transaction (buyer + seller), but **third parties are often affected**.
– **Definition (class-constructed):**
– A **negative externality** occurs when the costs of a transaction are imposed on people **outside** the buyer/seller pair.
– **Core example developed: coal purchase → burning coal → air pollution**
– Buyer and seller exchange coal, but burning it produces smoke/pollution affecting others.
– **Key mechanism emphasized: “abuse of a public goodâ€�**
– Public good identified: **clean air**.
– Public goods characterized (terms acknowledged but memorization not required):
– **Non-excludable** (cannot realistically prevent others from using it; people can’t “opt outâ€� of breathing).
– **Non-competitive / non-rival** (people are not directly competing for it in a typical setting).
– Negative externalities are harmful because they degrade a public good used by many who did not consent to the transaction.
#### 2) Internal Market Failures (three types reviewed)
##### a) Information Asymmetry
– **Definition developed through questioning:**
– One side in a transaction has **more/better information** than the other.
– The less-informed side cannot properly **value the transaction**, leading to inefficiency/exploitation.
– **Primary illustrative example: used car market**
– Buyer cannot verify true condition (maintenance history, driving behavior, hidden mechanical issues).
– Seller can “polishâ€� appearance while hiding internal problems and charge more than warranted.
– **Important nuance: market attempts to fix the failure**
– **Carfax** discussed as an example of the market trying to reduce information asymmetry by providing standardized vehicle history reporting.
– Instructor stressed: Carfax is **not public policy**, but a private-market corrective mechanism (and still potentially incomplete due to voluntary participation).
– Additional student-generated examples explored (and instructor feedback on fit):
– **Insurance/health insurance**: customer knows health risks more than insurer (adverse selection framing).
– **Visa agencies guaranteeing 100% success**: could be information asymmetry and potentially **fraud** if guarantees are impossible/misleading.
– **Land/property purchases**: seller knows about landslide/earthquake vulnerability; buyer cannot easily assess.
– **Tour agencies**: provider knows service quality is lower than advertised; buyer discovers only after purchase.
– **“Haunted houseâ€�** joke example used to reinforce the concept (buyer would value differently if they knew).
##### b) Voluntarism (lack of real choice/competition)
– **Definition emphasized:**
– A market fails when at least one party lacks meaningful ability to choose among alternatives; **competition is absent**, undermining fair pricing/quality.
– **Core mechanism tied to free-market theory:**
– Markets “workâ€� via competition—if one seller is bad/expensive, consumers switch.
– Voluntarism failure occurs when switching is not realistically possible.
– **Canonical example: electricity provider monopoly**
– Consumers generally cannot choose among multiple electricity sellers.
– If the provider raises price or lowers quality, consumers must accept (electricity is difficult to live without).
– Concepts surfaced but not required to memorize:
– Students asked about **monopoly vs. monopsony** (single seller vs. single buyer); instructor said difference is not required for exam, but conceptually useful (e.g., labor market with one employer).
– “Everydayâ€� voluntarism examples debated (with instructor emphasizing argument quality and reasonable constraints):
– **Single supermarket in a small town**: necessity good + no alternatives → can charge high prices / offer low-quality goods (e.g., old vegetables).
– **Campus kitchenette/cafeteria**: limited time between classes restricts alternatives; high price/low quality may reflect constrained choice.
– **Coffee shop service charge**: could be voluntarism *only if* there is no reasonable alternative; discussion highlighted boundary issues (“how far is too far to travel?â€�).
– **Education markets**:
– Student described a school marketing itself as an “international/IGCSEâ€� provider but failing to deliver:
– If the core issue is false representation → **information asymmetry**.
– If it is the only feasible option needed for a required credential → can also be argued as **voluntarism** (need + no competition).
– Question raised whether **AUC** could be voluntarism: instructor said it depends on proving (1) no competition for the specific “American diplomaâ€� product, and (2) that it is a necessary good for the student.
– Evaluation guidance for the exam:
– Instructor indicated the case dossier will be written so multiple arguments are plausible.
– Grading will prioritize **rigor of justification** over picking a single “correctâ€� label.
##### c) Rationality (most complex/subjective; economic definition)
– Instructor shifted away from purely “emotional purchaseâ€� and emphasized **economic rationality**:
– Rational = consistently pursuing the most efficient deal (price/value) given available options.
– Failure of rationality = buyer could make a more efficient choice but doesn’t (due to time, energy, willpower, convenience, cognitive limits).
– Examples used/discussed:
– **Coupon/app pricing model**:
– Store “raises pricesâ€� but offers discounts via app coupons.
– Many consumers won’t spend time/attention to optimize coupons → they pay more to save time.
– This can be framed as rationality failure: efficiency is available but not pursued.
– **Gambling**:
– Even when odds are known (no info asymmetry), people still participate; can be framed as rationality failure.
– **Predatory online shopping promotions**:
– “Spend 900 more to get free shipping/bonusâ€� nudges consumers into higher spending than planned.
– **Expensive weddings / social pressure** raised by a student:
– Instructor redirected to the need to define what exactly is being “bought and soldâ€� (transaction definition) before diagnosing rationality within a “marriage marketâ€� metaphor.
– **Art market**:
– Student example initially sounded like information asymmetry (novice buyer misled about value).
– Instructor provided a rationality framing: paying a middleman for convenience when you could do the search/selection yourself could be argued as rationality failure (inefficiency due to convenience/time tradeoff).
– Meta-point tied back to course theme:
– Interpretation of problem/failure is political; **who defines the problem helps define the solution**.
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### G. End-of-Class: Midterm Logistics, Rules, and Final Clarifications
– Instructor announced time and exam reminders for Thursday:
– **Arrive on time.**
– Bring: **pen** and **~4 sheets of clean tear-out paper** (notebook paper is fine if it can be ripped out).
– **Closed notes**: no notebooks, computers, phones.
– **Strict electronics policy**: using phones/earbuds/Apple Watch/etc. leads to removal and **zero** on the midterm.
– Student asked if “time limit mattersâ€�; instructor response: “doesn’t matterâ€� (as stated in transcript).
– Final student clarification:
– Students should **ignore the policy cycle** for the midterm.
– Exam focus remains: grievance vs. condition vs. policy problem, and if policy problem → identify market failure.
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### H. After-Class Coordination: “NJ Promotion� Presentation
– A student discussed an upcoming **joint presentation** with students from “NJ Alarmâ€�:
– Format: “one slide per person.â€�
– Instructor requested they **send the presentation** ahead of time to know general content (not a full script).
– Suggested content themes: why they chose ICP, what ICP has done for them, skill/professional development, etc.
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## 4) Actionable Items (Short bullets, organized by urgency)
### Urgent (Before the Midterm / Next Class)
– **Create/finish the midterm case dossier** (instructor indicated goal was “tonightâ€�).
– **Send/remind students of exam logistics** in writing (closed notes, bring ~4 sheets of paper, strict no-electronics rule, arrival time).
– **Confirm official communication channels** and communicate the replacement workflow:
– Telegram discontinued; coordinate collaboration via **email / e-course / Google Docs** (decide and announce the specific method).
### Soon (After Midterm Break / Second Half Planning)
– Prepare to reintroduce and teach:
– **Policy cycle/problem statements** (explicitly postponed until after midterm break),
– **Stakeholder analysis** and adopting stakeholder perspectives (promised emphasis after break).
– Begin scaffolding toward final assessment:
– **Policy memo + defense**, stakeholder identification, and **feasibility** analysis expectations.
### Coordination / Admin Follow-ups
– Collect the **NJ promotion presentation** from students when ready (instructor requested it be sent for preview).
– (Minor) Ensure **group paper handling** is consistent to avoid missing-paper confusion in future sessions (issue was resolved this time).
Homework Instructions:
ASSIGNMENT #1: Read and familiarize yourself with the new student code (academic/communication policy)
You need to read the university’s new student code so that you understand the updated expectations for student conduct and (especially) the new restriction on class communications, which affects how you contact the instructor and how the class collaborates going forward.
Instructions:
1. Locate the “new student code� document provided by the university/program (the instructor referenced it explicitly as a required document: “There is also that new student code, which you should read and you should become very familiar with.�).
2. Read the entire student code carefully, focusing on:
1) communication and conduct expectations, and
2) any sections relevant to course communication channels and student responsibilities.
3. Pay special attention to the communication rule the instructor highlighted in class:
– You may not use external messaging apps/groups (e.g., Telegram/WhatsApp) for course communication (“Telegram we’re saying goodbye to… We were given instructions that we cannot have communications outside of email. Everything has to be done over email or e-course…â€�).
4. Update your own practices immediately:
1) Stop using Telegram/WhatsApp group chats for anything course-related.
2) Use only the approved channels the instructor named (email and the course platform tools) for questions, coordination, and class-related messages.
5. If anything in the student code is unclear (especially what “counts� as course communication), write down your questions so you can ask via the approved communication channels.
ASSIGNMENT #2: Send your group’s “NJ promotion / NJ Alarm� presentation to the instructor
You need to share your group’s presentation with the instructor in advance so the instructor knows what you plan to cover and can structure the session appropriately. This is connected to the in-class discussion about creating a “common…presentation� with “one slide per person,� and the instructor’s request: “All I need is for you to send me the presentation… just give me an idea of what you guys are going to talk about in general.�
Instructions:
1. Work with your group to complete the shared presentation deck.
2. Follow the required structure mentioned in class:
– Create one slide per person (“It’s one slide per person.â€�).
3. Ensure your content matches the topics the instructor expects you to cover (the instructor listed examples of what they need an overview of):
1) why you chose ICP,
2) what ICP has done for you, and
3) how ICP has developed you as a student and as a professional.
4. Do not worry about writing a full script unless your group wants one; the instructor said they only need a general sense of what you will talk about (“You don’t have to give me your full script… just give me an idea…�).
5. When the deck is ready, send the presentation file/link to the instructor (“Yeah, whenever you have it. That would be great.�).
6. If you are still revising, send the most current version you have by the time you finish (“I will send you… first of all, when we’ll finish.� / “Yes, that would be great.�).