Moving the Curriculum into the Twenty-First Century: Recent Advances in Economic Theory and Undergraduate Economics

Abstract:     
Undergraduate economics lags behind cutting-edge economic theory. This paper briefly reviews seven related advances: game theory modeling, information economics, social preference, conceptualizing rationality, contracting/enforcement, collective-action problems, and social mechanisms/institutions. These developments profoundly extend and deepen economic analysis. A game-theoretic political-economy perspective facilitates their integration into the undergraduate curriculum. This paper offers specific concepts for introductory economics including reciprocity as a fundamental element of utility and implications of non-rival knowledge on economic growth. If offers prisoners' dilemma representations of collective-action problems as an analytical framework, on par with supply/demand, for analyzing market failures, enforcement, market structure, institutional prerequisites for successful exchange, and policy. The paper closes with ideas for more advanced courses, e.g. asymmetric information, social preference, or institutional construction, yielding implications on efficiency and distribution.

Number of Pages in PDF File: 38

JEL Classification: A10, A11, A22

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