Reserved Seats, Awkward Conversations vs Enforceable Contracts and Transaction Costs

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I went to see Project Hail Mary today, and while driving there, I got to thinking about how late I was, and whether my seat would still be empty and not taken up by someone else. It was a great movie by the way, among other things, a genuinely fun buddy comedy about two very different beings trying to cooperate across an almost total communication gap using fundamental math, time and the concepts of physics and chemistry to learn each other’s languages. I totally recommend it. But coming back to my pre-movie ruminations, would my seat still be empty? And if now, how would I respond.

Before we dive in further, I’ll add a disclaimer, I have always been fascinated by the economics of the movies business’s and almost a decade ago during the short-lived heydays of Moviepass, I tried to convince one of my IO professors in grad school that it would be a great theory paper to write. Mind you, I was in an applied micro program but my intuition and the skeleton framework I had put together turned out to be true, Moviepass was unsustainable and the only way the system would work if it was able to both sell our data at a substantial price and also partner/team-up with a specific theatre chain and capture a portion of the market. But I digress, let’s come back to today’s issue.

Playing out a probably scenario in my head before I am confronted by it is what I do. And just because I reserved a great seat (I am picky about good viewing angles and the right row and will pick a different showtime and smaller screen just to get a better angle), I knew there was not a guarantee I would find it waiting for me. So there I was, driving and thinking about who actually owns the seat I was sitting in, and what would happen if someone (me) showed up to claim it and there was someone else sitting in it.

A few years ago, buying a movie ticket was quite simple. You paid, you walked in, you picked an empty seat. First come first served. The Southwest Airlines rules (I know they have recently changed their own rules now). If you came early, you got to line up and pick the best seats. Today the whole experience is a lot different. You buy online, you select Row F, Seat 12 at the time of purchase, and that seat is in principle yours to sit on when you show up. You can even time it perfectly so you skip the ads (and even the trailers if you wanted to) and slip into your seat just as the movie starts. Reserved seating reduces uncertainty, eliminates the scramble for good spots, and makes coordination easier for groups – back in the day, you would have to meet up 20-30 minutes ahead of time and you still might not be seated together. These are genuine improvements in the consumer experience. Of course this allows movie theaters the ability to do what JetBlue, Delta, American and all the other airlines have begun doing – charge higher prices for better seats, make it a premium product, and extract more consumer surplus. What economists call price discrimination. But that is a rant for another day.

No, instead let’s focus on the simpler and nicer version of the story – the one where I don’t pay extra for reserving a good seat ahead of time. Embedded in this wonderful change is quite the interesting trifecta of economic ideas – clearly defined property rights, an enforceable contract, and the persistent, underappreciated role of transaction costs and how they interact to reach the final outcome. The interesting question isn’t whether you have the right to your seat (you do, that is the agreement between you and the movie theater). No, the interesting question becomes whether you’ll actually do anything about it if someone else is sitting there.

And lo and behold, I had to answer that exact question today as I had guessed I might have to, being a couple of minutes late.

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Games as a way to teach concepts in class

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I went to a workshop called Let’s Play: Designing and Using Games in Your Classroom, led by Dr. Tamara Stenn this week. Organized by the Suffolk’s Center for Teaching and Scholarly Excellence (CTSE), it was quite an illuminating experience, and in a way quite validating. I have always enjoyed and used little games in classroom to liven up the classroom. The interactive and experiential element is always great for learning.

So, it was wonderful to see someone else advocating and building far more elaborate games in class. Sitting there, I kept recognizing things I do, but what was interesting was how well organized and structured Tamara’s games are. And well thought out. Most of the activities I arrange for the students in the classroom evolved through trial and error over a few years of teaching principles courses at Northeastern and reading about other people’s experiences introducing similar Economics games in class. But this workshop provided a wonderful framework tied to theory on what works, and it pushed me to finally write up and think a little more about my own in-class games.

The framework? It’s Kolb’s experiential learning cycle. It’s quite a useful way to think about what a well-designed classroom activity actually does.

Kolb’s Experiential Learning Cycle
Stage 1 Concrete Experience

Students play, decide, bargain, or respond. Something actually happens to them.

Stage 2 Reflective Observation

Students describe what happened, what they noticed, and how others responded.

Stage 3 Abstract Conceptualization

Students connect the experience to course concepts, models, and vocabulary.

Stage 4 Active Experimentation

Students apply what they’ve learned to a new scenario, question, or real-world situation.

The key takeaway is that it explains why stopping at just the game is a job half-done. The experience is just stage one. The learning payoff is in the processing — the moment when students look back at what they just did and connect it to what they are studying. And that’s when learning comes full-circle.

Economics lends itself to these kinds of games in-class more than most subjects. Incentives, constraints, trading and trade-offs can be thoughtfully designed from abstract concepts to simple and intuitive demonstrations using games for a fun 15 to 20 minute activity. Here are five games I’ve used in introductory economics courses, and if you want to read a little more about them, follow the link. They are written up with enough detail that someone else could easily introduce them in the classroom too.

Five Games, Five Concepts
  • The Candy/Chocolate Game Marginal utility & diminishing returns
  • Mixers or Butter Production possibility frontier & opportunity cost
  • The Iced Tea Experiment Demand, WTP & demand shifters
  • Tragedy of the Commons Externalities & market failure
  • The Voting Game Median voter & ranked choice voting

Where this is going.

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Sure, after 4 years of silence, it feels a little strange to write posts on a schedule, but as I spend time thinking and charting on what I want to do here, I feel like writing an update will help solidify my thoughts too. So this post is about what we’re doing now that we’re here.

When I started this site in 2017, it was mostly a place to think out loud about economics and occasionally complain about ISPs and how corporate profit maximization and rent seeking behavior can reduce social welfare. The tagline was accurate but vague, because I did not wish to constrain myself or set goals.

That’s still sort of true. But there are things that I want to write in a structured fashion now. And I will elaborate on that below.

Higher Ed is where a lot of my professional focus has been these past few years. After all, I work in institutional research at a university. If you need an introduction or refresher, this means we’re the people who do research for the university, on the university. It’s a strange and underappreciated corner of higher education, and it gives me a particular insight on the questions that are being discussed more and more: what is the future of higher education? How will the demographic shift affect colleges and universities? Especially small tuition dependent colleges? What is the value of a college degree? I’ll be writing more of that here, and some of it will be more formal – not just thoughts and discussions, but some questions that will turn into research.

There’s a Higher Ed section where I will chronicle a running list of these discussions. It’s a little empty, but it will start populating soon.

However what I also enjoy a lot, and haven’t had a chance to do much of recently, is to teach. And that is where the second structured bit of writing will show up. The microeconomics series started because this teaching instinct won’t leave me alone. I have taught principles of Micro and Macro at Northeastern, but if given the choice, I prefer teaching micro just a little more. One of the things I have always noticed with my students is that they connect better with real world concepts. If you look at my past exercises and slides, you will see my take on it – and it’s really a hodge podge of things. Pop culture and popular TV shows, current affairs, scenarios from fiction, and so on. This particular series will have a more thorough focus on the education market. Education is a remarkably good case study for almost every core microeconomic idea – from demand and supply curves, market structure, price discrimination, externalities to more complex ideas like information and public economics. So, I have sketched out a 15-chapter series using higher education as the running example throughout that I plan to write out.

It’s not really a textbook. Not yet. Each chapter will be relatively short and focused.

You can start here.

Still Here. Starting Things Again. The Internet Still Survives

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It has been a while. And in some ways, some days, I feel like a lot of you in that we live in the darkest timeline. It’s funny how excellent but somewhat obscure TV shows introduce such wonderful pop culture references into our vernacular, isn’t it?

The last time I posted here, it was April 2021, and the world was still largely indoors. A lot has changed since then. Vaccines were being rolled out. And the world slowly opened up again. I moved. Changed jobs. Even got a promotion of sorts… a manager/supervisor at home. I became a father and the Toddler Economist has entered the picture, and she has opinions, mostly about berries, books, and bedtime.

And this site sort of went into a holding pattern. Going quiet the way things do when life decides it has other that take priority. And while I might have less time to write, there are a dozen different things I do want to talk about. And at some point thinking out loud to no one feels less useful than thinking out loud here.

So. We are back.

A good way to mark the occasion, I thought, would be to revisit the first piece on this site – my particular interest then, and even now. The role of platforms and the dozen invisible things they do that affect us. Much has changed in the world since then, and though net neutrality is no longer a buzz word (hint: it’s AI), it is still quite important. The argument then was simple: without rules requiring ISPs to treat all internet traffic equally, the companies that own the pipes get to decide what flows through them. Fairness on the internet isn’t guaranteed. It has to be enforced.

Eight years later, the US has managed to establish those rules, repeal them, reinstate them, and then have a federal court strike them down again. Any permanent fix would now requires Congress.

Congress.

Sigh.

And if you were hoping our friends over in Europe might come good here, that is not happening either. Europe may have long been a stalwart for net neutrality principles, the new Digital Networks Act out of the EC is a shift away from the old open and neutral internet. Sure it is being framed as modernisation of telecom rules, but it is quite the backsliding from the net neutrality rules of old.

Not all hope is lost. Individual states have implemented a patchwork of net neutrality rules, and I would love to look more into the practical implications of these differences across states. But in the meantime if this matters to you, call your senators and let them know.