Scott Duke Kominers (Harvard Business School)
Freshman Seminar 72K 4 credits (fall term) Enrollment: Limited to 12
Markets are everywhere, but they don’t always work the way we want them to. While economists’ “ideal” markets are supposed to find their way to socially optimal outcomes, real-world markets often fall far short. Valuable goods don’t always reach the people who want to buy them; prices don’t always match up across venues; and jobs can be hard to find even when the labor market isn’t tight. This seminar explores the purpose and potential of markets, drawing on classical ideas in economic theory. At the same time, we look at the pitfalls: how and when markets lead to inequitable outcomes, or just fail to create value overall. Then, we ask: How should markets work—and how can economists and entrepreneurs help bring them there? We learn what makes marketplace platforms successful: How Uber and Airbnb create value from slack capacity; how social crowdfunding platforms like GoFundMe create trust; and how both dating sites and Craigslist thicken thin markets. And we see how marketplace design creates opportunities even in settings we might find surprising, such as when the nonprofit Feeding America uses a marketplace mechanism to distribute food to its nationwide network of food banks. Finally, we explore how better marketplace design can help address some of the deepest problems today’s markets have created—including inequality, the decline of labor, and climate change. Readings include research and philosophy papers, economics journalism, business case studies, and even a bit of fiction. Yes, we will discuss cryptocurrency/blockchain.