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The Park Place Economist

A Student Publication of the Illinois Wesleyan University Economics Department

Volume XIV

April 2006

Bloomington, Illinois

IWU Printing Services

The Park Place Economist

Illinois Wesleyan University Department of Economics Bloomington, IL 61701-

2005-2006 Editorial Board

Editor-in-Chief John Haugen Technical Editor Adam M. Gray

Assistant Editor-in-Chief Todd Kumler Assistant Technical Editor Scott Swisher

Article Editors Jennifer Dawson Nick Holland Adam Turk

Cover Artist Joline Buege News Editors Ben Burry Dan Haeger Brandin Heidbreder Adrienne Ingrum Nmachi Jidenma

Faculty Advisor Dr. Robert M. Leekley

The Illinois Wesleyan University Department of Economics assumes no responsibility for any statement appearing in The Park Place Economist , Volume XIV, April 2006.

Letter from the Editor

Thank you for taking the time to read the XIV edition of The Park Place Economist. The Park Place Economist is one of only a handful of undergraduate economics journals published in the country. Those who are familiar with the Department of Economics at Illinois Wesleyan University recognize it as a valuable showcase for the best economics research conducted by Illinois Wesleyan students. Please browse our content page for an overview of this year’s work; as always, a vast array of top- LFVLVSXEOLVKHG3HUHQQLDOIDYRULWHVVXFKDVVSRUWVHFRQRPLFVLQWHUQDWLRQDOWUDGHÀQDQFLDOPDUNHWVDQG labor economics are integrated with more distinctive topics such as sustainability, child development, and homeland security. I would like to take this opportunity to thank the staff, especially Adam Gray and Scott Swisher, who have contributed many hours to this edition. Also, much thanks to Dr. Leekley, whose guidance and counsel have supported this process immensely. Thanks to the entire Department of Economics for sup- porting this journal. I have been involved with this journal for four years and have learned much about the research and writing process through The Park Place Economist. My hope is that students involved with this journal will continue to learn in the same way from working with its publication. I hope you enjoy our edition and continue to support this journal, the Department, and Illinois Wesleyan University. Thank you!

John R. Haugen Editor-in-Chief

General Information:

Submissions to The Park Place Economist are always welcome, and we encourage students to participate in the creation of the journal. If you are interested in submitting an article or becoming a member of the staff, please contact Dr. Robert Leekley, the faculty advisor, at (309) 556-3178 or at bleekley@iwu.edu. Written queries can be addressed to:

The Park Place Economist Attention: Dr. Robert M. Leekley Illinois Wesleyan University P.O. Box 2900 Bloomington, IL 61701

David Rasho graduated from Illinois Wesleyan in 2001 with a double major in Economics and Business Administration. Since graduation he has found employment at Analytic Innovations, D FRQVXOWLQJ ¿UP VHHNLQJ WR ¿QG PDUNHWLQJ solutions for companies with large customer portfolios and complex databases. Among AI’s clientele are banks, retailers, and entertainment service companies who employ AI to improve marketing return on investment, retain customer UHODWLRQVKLSVDQGLPSURYHRYHUDOOSUR¿WDELOLW\

Recently, David was able to take a few moments away from his position as Senior Database Marketing Consultant to answer a few questions for The Park Place Economist :

Why did you choose to work at Analytic Innovations? I wanted to work at a company where I could grow as fast as my skills would let me, and where I would gain exposure to lots of business issues and bright/driven people. I felt that AI provided me a rich learning environment that was fun and laid-back but intense and demanding at the same time.

What does Analytic Innovations do for its clients? Basically we help our clients, typically large companies with lots of customers, understand and enhance their customer portfolio through data mining and predictive modeling.

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model at Analytic Innovations? I began as a data analyst, where I learned to program in SAS and Visual Basic and ran reports/analyses. After a little less than a year I moved into a client

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biggest accounts. Basically I work to understand what our clients need, determine how to align our efforts internally to get the work done, and handle WKHFRPPXQLFDWLRQRI¿QGLQJVEDFNWRWKHFOLHQW I also have personnel management responsibility for several senior technical resources, which has been a uniquely challenging and rewarding experience. In addition, I spend a large amount of time working on business development initiatives both inside and outside of the accounts I manage.

What are the best and not so good aspects of your job? I like most everything about my job. The people are diverse and kind, the work is interesting, the environment is fun, and I have a high degree of independence. Consulting is great in some respects because you get to learn a lot about how big companies operate without having to deal with the red tape that they face. On the other hand, when you’re a consultant sometimes the hours are URXJK\RXGRQ¶WKDYH¿QDOVD\RQKRZ SURMHFWV are prioritized, and a lot of your time is spent trying to make other people look good.

How has your IWU education helped you in your occupation? To be honest, I think that playing football and being president of Sigma Chi were at least as helpful to me as all of the coursework. For the most part, to be successful at your job you need to be able to work hard (especially when things get GLI¿FXOW PDQDJH\RXUWLPHZRUNZHOOZLWKRWKHUV effectively communicate with different types of people, and constantly challenge yourself to learn and do new things. Athletics and leadership roles within extra-curricular activities are great ways to develop those skills. In terms of coursework, I

Interview with David Rasho

Ben Burry

Alumni Notes

Dan Haeger

Melissa Arms Van Dyke, ‘99, is a Product Manager for Maritz Incentives. She manages the scoping, building, deploying, and marketing of new software products.

Pritam Banerjee, ‘01, earned a Masters in economics and diplomacy at Jawaharlal Nehru University in New Delhi in May 2003. He accepted a fellowship with the Confederation of Indian Industry, WTO Research and Consultancy wing, with Dr. T.K. Bhaumik. He began work towards a Ph.D. at George Mason University in Fall 2004. He spent Summer 2005 interning at the World Bank in Washington D.C. He says that the Econ department changed his life.

Chris Bisaillon, ‘93, is regional vice president of Van Kampen Investments in Lincoln Park, Illinois. He also is part owner of 3 different businesses: Thorne Concrete LLC, High Point Estates and Golf Club, and Bisaillon Excavating.

J.R. Glenn ‘05, has entered the Masters program at the Institute of Labor and Industrial Relations, University of Illinois at Urbana-Champaign in Fall 2005.

Paul Halley, ‘94, went on for an MBA at the Owen Graduate School of Management at Vanderbilt University, graduating in 1998 with a dual concentration in Finance and Telecommunications/Electronic Commerce. He now works for SAP America as a consultant. He is married to Diana Johnson Halley, ‘94.

Diana Imaka, ‘96, worked with the Latvian Privatization Agency, a company that worked with private investors interested in purchasing state-owned enterprises. Then, after an MBA at the City University Business School in

London, she became a business consultant with Deloitte & Touche in Latvia. She is still in Latvia, working now as a business consultant in a company in which she is a partner.

Mark Israel, ‘91, received a Masters Degree in Economics from the University of Wisconsin before working in the research department at State Farm for several years. Mark then returned to graduate school at Stanford University, where he earned a Ph.D. in Economics. He is now an Assistant Professor of management and strategy at Northwestern’s Kellogg School. Mark came back to IWU in Spring 2003 to give our Omicron Delta Epsilon address.

Kara Lazarus Rocheleau, ‘95, is currently the Global Marketing and Communications Manager for American Medical Systems, Inc. Her responsibilities include the branding, positioning, and communication of medical devices around the world. She encourages IWU students to learn how to write because it will be critical to any job.

Rahim Quazi, ‘92, pursued graduate studies in Economics at Southern Illinois University until 1993, when he transferred to the Ph.D. program at the University of Illinois at Urbana-Champaign. He also spent one year as a visiting lecturer for North South University in Bangladesh during the course of his graduate work. He has been Assistant Professor of Economics at Prairie View A&M University of Texas since 2002.

Max Proaño, ‘94, is the Senior Treasury Manager for the HBO Latin America Group. He received his Masters of Science and Information Assurance from Carnegie Mellon University in 1996.

Alva Winfrey, ‘00, received her Masters in

The Class of 2006

Brandin Heidbreder

Urban Planning and Policy in 2002 from the University of Illinois at Chicago. She works for LaSalle Bank as a Project Specialist, researching, FRRUGLQDWLQJ DQG IDFLOLWDWLQJ ¿QDQFLDO SURJUDPV for low income populations and coordinating

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organizations. She is glad she chose to study economics because it “gave her the tools to help others achieve a better quality of life.”

Below we see a glimpse of this year’s Illinois Wesleyan University Economics major graduates.

Patrick J. Cinquegrani Pat is an Economics major with a minor in Business Administration from Barrington, IL. At IWU, he was not only busy in the classroom, but was also a member of the Sigma Chi Fraternity and played baseball for four years. Pat’s favorite class here at IWU was Managerial Economics and also thinks his class with Dr. Seeborg his freshman year was a “hoot.” After graduation, Pat plans on being the best at whatever he does, raising a big family, and retiring to Sicily or Colorado. At this point he plans on becoming a commodities trader. “The most important thing that I took away from econ after my four years is that I should get the most out of each day I am alive because, as John Maynard Keynes once said, ‘In the long run, we are all dead’.”

Jennifer Dawson Jen is a double major in Economics and Business Administration with a concentration in Finance from Davis, IL. She cannot quite pinpoint a favorite class because she has “enjoyed many”. She was president of the Economics Society and Omicron Delta Epsilon, has worked with this publication, and has been actively involved with InterVarsity during her four years at IWU. After getting married this fall, she will be moving to Lafayette, IN where she will strive to “love well, laugh a lot, work hard, and not have any regrets”.

She would like to, someday, become a pilot on the side and travel to a whole bunch of places that she has never seen.

Matthew Demas Matt, from Oak Park, IL, is a double major in Economics and Biology. Matt’s favorite class was Economics 100 with Professor Cring because Professor Cring made economics exciting to learn and offered his students chewing tobacco. When not in the classroom, he spent his time participating in IWU Men’s Club Volleyball, Violin, Orchestra, chamber music groups, Cross Country, and WESN radio. After IWU, Matt will be attending dental school.

Kathleen Frawley Katie is an Economics and Political Science double major from Oswego, NY. Katie was a captain of the softball team and the co-president of the Student Athlete Advisory Council. Her favorite class at IWU was Econ Senior Seminar. Upon graduation, Katie will be attending graduate school at American University and looking for a job in the DC area.

Adam M. Gray Adam is a double major in Economics and Computer Science from South Jacksonville, IL. Adam enjoyed taking Advanced Research Seminar because it allowed him to research and learn the material at a pace that is most comfortable to him. Adam is an active member of Economics Society and one of the founders of Sigma Theta Epsilon.

retire in comfort.

Louis Malic Louis is from Flossmoor, IL and is a double major in Economics and Business Administration with a concentration in Finance. Louis is also a member of the Sigma Chi Fraternity and the Ambassadors Club. His favorite class here at IWU was Astronomy. Currently Louis is looking for a job and plans to get an MBA in the future.

Monica Rose Monica hails all the way from Fremont, CA and double majors in Economics and Business Administration. She is involved with the Black Student Union, Sisters Actively Visualizing Vitality through Intellect, Promise and Potential Coaching Program, Urban Girls, and Intercultural Leadership Alliance. Monica plans on working in the Chicagoland area for two years after graduation and then hopes to attend graduate school at the University of Chicago.

Erich Sauer Erich, from Elgin, IL, majors in Economics and minors in Coaching. His favorite class was Acting for Non-Majors. He actively participated in football, track, and the Sigma Chi Fraternity during his time at Illinois Wesleyan. Erich plans on interning at Walt Disney World after graduation.

Adam Turk Adam is from New Lenox, IL and is a double major in Economics and Public Accounting with a minor in Mathematics. Adam’s favorite class here at IWU was Econ 100 with Professor Cring, partly because he was offered chewing tobacco by Professor Cring during class. Adam was a member of the Econ Society, Accounting Society, College Republicans, and DRL Christian Fellowship. After graduation, Adam plans on getting his CPA FHUWLÀFDWLRQDQGDWWHQGLQJODZVFKRRO

Vance Veazey Vance majors in Economics and is from Olympia Fields, IL. His favorite class was Theory of Physical Education. He also participated in baseball while here at IWU. Vance has a job after graduation as a reinsurance agent with Renaissance Financial Services.

Game theory shows how strategic decisions of interdependent actors interact to produce outcomes. Like its name suggests, game theory deals with games, with actors using different strategies to maximize their results. The 2006 Omicron Delta Epsilon guest lecturer, Illinois Wesleyan Alumna and Assistant Professor of Economics at Fordham University, Dr. Gwen Alexander, based her talk on game theory and its application. A typical game is comprised of players, their actions, and the pay-offs of those actions. The players are the decision makers and they base their decisions on an analysis of the pay-offs of their various strategies. They also interpret the information structure of the game as it makes a whole world of difference in determining the results. For instance, a game of perfect information where every player knows every move of every other player would have actors making far different decisions from a game of imperfect information where the players are not aware of their rivals’ moves. After a detailed explanation of the prisoners’ dilemma, Dr. Alexander launched into her most interesting “application” of game theory to the movie A Beautiful Mind. 7KH¿OPLVVHWLQ and focuses on burgeoning future Nobel laureate John Nash as he introduced the concept of the Nash Equilibrium and essentially founded game theory. A Nash Equilibrium occurs when players are doing the best they can holding constant the choice of their opponent. Russell Crowe, playing the part of John Nash, supposedly acts out how Nash discovers his theory, but Dr Alexander shows ZK\WKH¿OPGRHVQRWDFWXDOO\VKRZKLP¿QGLQJD Nash Equilibrium. ,QWKHVFHQH1DVK &URZH LVVWXG\LQJLQDEDU with his friends when they sight four attractive brunettes and a supposedly more attractive blonde across the room. Nash and his three other friends

are all interested in the blonde but Nash rationalizes they will all be better off if none of them go for the blonde. He reasons that if they all go for the blonde, she will reject them all. They will end up not getting any of the brunettes either because the brunettes would not like to feel inferior to the blonde. However, if they all go for the brunettes and none of them goes for the blonde, they will all get the brunettes and be better off. Thus, the optimal strategy according to Nash would occur when “everyone does what is best for himself and the group.” According to Dr. Alexander, the entire situation did not have a Nash Equilibrium. Dr Alexander asserted that the solution to the game was a mixed strategy solution, or a strategy that comprises probability distributions given actors’ choices. In this instance, there are two equilibria and therefore there is no clear solution as to what the outcome will be without considering probability. There is no dominant strategy for either player, and as such, WKHUHFDQEHQR¿QDO1DVK(TXLOLEULXP7KRXJK the moviemakers probably did not care much, they were actually misrepresenting Nash’s theory. Regardless, Dr. Alexander demonstrated the versatility of game theory. Game theory can be applied in diverse spheres of life. It can be applied in trade wars as a policy instrument. In the realm of politics, it can be used in the arms race to predict nations’ possible actions. In business, it FDQEHXVHGLQFROOXVLYHDJUHHPHQWVEHWZHHQ¿UPV WR DVVHVV ULYDO ¿UP¶V EHKDYLRU ,Q HQYLURQPHQWDO economics, it can be used to assess global commons SUREOHPV VXFK DV RYHU¿VKLQJ :KHQ ZH SOD\ chess and checkers we play sequential games of perfect information. Knowledge of game theroy gives economists an analytical framework with which to work with in the workplace, in school, at home, and even in debate.

Game Theory, John Nash, and Film

Nmachi Jidenma

Peter Coy, William Symonds, and Laura Cohn    +RZHYHU IRUPHU &RPPHUFH 6HFUHWDU\ Donald Evans stated “In the academic world, you can develop lots of sound ideas, but you have to convert those into good policies. [Bernanke] has been able to bridge the two.” Additionally, due to his monetarist academic background, he has avoided the more partisan economic issues such as tax and spending policies, and therefore, will most likely remain faithful to his line of specialty, PRQHWDU\ SROLF\ DQG UHIUDLQ IURP JLYLQJ ¿VFDO policy advice. Essentially, only time will reveal how Bernanke fares after the Greenspan legacy. However, from what I can tell, Bernanke’s strength lies within his impressive intellect, non- partisan research, and personality which might spice up the Fed based on this proposal he made to the Fed. “The Fed governors should signal their commitment to public service by wearing Hawaiian shirts and Bermuda shorts.” Perhaps one day the signal that interest rates are changing will be Bernanke sporting this tropical attire!

REFERENCES

Coy, Peter. ³:KDW¶V WKH )XVV 2YHU ,QÀDWLRQ Targeting?” BusinessWeek no. 3958 1RYHPEHU 

Magnusson, Paul, Peter Coy, William C. Symonds, and Laura Cohn. “The New Fed: Why Greenspan Successors Bernanke Will Preside over a Diminished Central Bank.” Business Week no. 3958 1RYHPEHU 

Mandel, Michael, Peter Elstrom, Justin Hibbard, and Christopher Palmeri. “Looking Back: Greenspan’s Rich Legacy—He Nurtured Booms, Cushioned Busts, and Saw What Others Didn’t.” Business Week no. 3958 (November, 7