Clinical Assistant Professor Justin Downs is a new addition to the Department of Economics, joining us in Fall 2020. He is a microeconomic theorist focusing on behavioral contract theory. He received his PhD from the University of Washington. This semester, you can find him teaching Introduction to Microeconomics (ECO 182) and Introduction to Macroeconomics (ECO 181)!
Why did you choose economics? Why did you choose your subfield?
JD: I chose economics because I really enjoy the way mathematics can be used to represent real-world behavior and decision-making. Solving the models is fun because it is often like solving a puzzle, and interpreting the results is fun because it helps us understand the world around us. Many times, the math can show us something about human behavior that we would not have noticed otherwise.
My subfield is called “Behavioral Contract Theory”. This is a type of Game Theory which studies the way asymmetric information and behavioral biases interact to shape the way organizations and markets function. My interest in this field stems in part from its ability to explain or predict otherwise unintuitive behavior. Why would someone purchase a subscription or membership for access to a good or service and then rarely use it? Why are contracts for things like internet service and cell-phone service structured the way they are? When will market interactions help people learn of their own biases and when will they not? I am also interested in this field due to its methodology. The models are usually relatively simple and easy to work with, and yet can provide new insights that other very complex models might miss.
What research are you working on right now?
JD: My current research agenda is to understand the types of contracts that are offered to overconfident people, and specifically, when those contracts will exploit people’s overconfidence and when they might help them learn not to be overconfident. I also want to understand how overconfidence can make unexpected things happen in markets and organizations.
What was your favorite paper to write, and why?
JD: My first paper, “Information Gathering by Overconfident Agents” is my favorite because it is the simplest possible model for the intuition I was trying to capture. Economists always strive to explain complex or subtle ideas in as simple a way as possible and I believe I accomplished that in this paper.
What is your favorite class to teach, and why?
JD: My favorite class to teach is Game Theory. In this class, I get to show students how economists think about making predictions, and what it means for a prediction to be a good prediction. This shows the students that economics, like all sciences, is never “finished”, and that if they work hard and are clever, they can help contribute to the field as well.
What was your favorite class as an undergrad?
JD: I know I am supposed to say it was an economics class, and I did love a lot of my economics classes, but it was actually a poetry class. Each week we would read a famous poem, write creative or analytical responses to them, and discuss them all as a class. It was a lot of fun and I got to write a paper on how an Emily Dickinson poem was really about a Zombie Apocalypse.
My favorite class as a graduate student was a class in Contract Theory. This class is what convinced me to make Contract Theory my field of study.
What is your top piece of advice for your students?
JD: If you spend a little extra time trying to understand a concept or a model, it will pay off because you will be able to apply that understanding in new and unfamiliar situations. You need to remember things in economics, but it is not about memorization, it’s more about thought processes.