Contributing Writer: anonymous | May, 2016
After attending only two lectures of Professor Rostek’s Game Theory class, I decided to drop it. Don’t get me wrong, her teaching methods, apparent from day one, are engaging, enlightening and interesting to say the least. However, I was simply overwhelmed with fear of competing with the students in class, and quite honestly, there were one too many math and economics double majors in that lecture hall. According to student ratings, Game Theory is deemed to be one of the most difficult advanced economics elective offered at UW-Madison. Also according to student ratings, Professor Rostek is one of the best lecturers to take up this challenging class with. Luckily, I had the pleasure of engaging in an insightful and inspiring conversation with Professor Marzena Rostek.
Marzena Rostek is currently a Professor of Economics at UW-Madison. Her passion for this subject is evident through her extensive research on related topics such as Market Design, Microeconomic theory, and Finance. Her multi-faceted papers tackle the behavioral aspect of decision making and integrate the complex mathematics and econometrics required to explain such behavior. Presently, she is working with Semyon Malamud, a Swiss Finance Institute Associate Professor at Lausanne, to prove that there is an efficiency based argument for decentralized markets. “This is one of the most exciting projects I have worked on”, says Professor Rostek. This excitement, coupled with her passion for human interactions in markets, is manifested through the answers she has provided during the interview. Needless to say, I have come to regret dropping a wonderful opportunity of expanding my knowledge and pushing my limits with the guidance of such an intelligent woman.
Tell us the story of how you got interested in Economics and who inspired/motivated you to enter this vast field.
I was attracted by Mathematics and was drawn by questions that had to do with how people interact and how they make decisions in market context and interactions in general. I’m from Europe, and unlike the US, in most European countries you need to declare your major in the application process. It was quite challenging actually. I read a few social science textbooks and realized that the way economics textbooks explained human interactions made me feel like I was learning something that got to the core of how things really are. It was a natural language to me and I was immediately drawn to it. It was the right choice for me because economics gives you an enormous freedom in questions and methods. Economics will always be an important discipline with a fresh supply of new problems which is part of the market value of an econ degree. Economics breeds on how institutions and markets change and we live in a very exciting time due to all the technological changes. By choosing economics, you are choosing a path with a constant potential to grow, you are choosing to be part of the future — always.
There are multiple differences in using Bitcoins vs credit cards to carry out transaction, including security, refunds and processing fees. The first cryptocurrency has been around since 2009, and has gained traction, but not enough to be used by an average consumer. Why do you think that is the case?
Part of it is just inertia. It is inevitable that digital currency will become important in the future. We are at an early stage of a process; we can’t fully understand the complete set of possibilities that digital currency will bring. It is similar to the introduction of a personal computer a few decades ago…At the same time we do know that the transition to a digital currency will be much more than eliminating the physical medium of exchange. The key potential from investing in digital currency is that its value will be different depending on the context and the financial activity, and this is an indication of where markets are going. What is exciting for us economists is that at this point, markets are ahead of economic theory and traditional economic analysis has been about markets we call centralized. So imagine a physical or an online marketplace in which all buyers and sellers exchange all units at the same price and for the same medium of exchange. We have pretty advanced and mature– very deep theories– of centralized markets. But if you look at what has happened in markets for the past 20 years or so, trade of financial assets as well as goods, has shifted away from public centralized exchanges towards alternative trading venues. So a more accurate description of the global markets structure is a network market, and we don’t yet understand how the counterparts of decentralized markets theory look like. In light of the existing traditional theories, decentralized markets and network markets are viewed as a friction. But once we start thinking about it, there seems to be a disconnect between the view of the decentralization as a friction and where markets are going right now.
With the current trend of decreasing oil prices, and Saudi Arabia pumping large amounts of oil into the market, and having lifted sanctions off of Iran’s market, what do you think the strategy will be for US crude oil producers?
This is actually a very subtle question. Aside from the usual forces of demand and supply, and aside from the strategic interactions, what is going to be important here is the political outlook and how the key countries will incorporate their expectations on the political aspect itself and not just their expectations on economic variables. I am curious myself to see how this will play out in the long run.
This semester you are teaching Game theory– one of the most (if not the most) difficult econ electives on Campus. Students who take this class love challenging themselves and often enter the course with a certain affinity towards the topic. In such a subject, the professor can either make the student love or hate the class depending on the teaching method. How would you attempt to make this class more exciting and what strategies do you use to have the students engaged?
I was not aware of the reputation of the course as hard. It is a privilege to be teaching game theory and I don’t take it lightly. Econ 521 is an honors electives intended for undergraduates with some econ background but I tend to waive the requirements in order to attract more students who are not necessarily econ majors. I have had students who major in engineering, computer science, physics, even biology and geography. This produces a diverse group of students with different backgrounds. My class is very interactive and they all bring different ideas and this creates something very unique in terms of the final output. The core principle that I use in every single lecture is that I try to make the students discover the ideas by themselves; I drop hints, build on students’ suggestions and sometimes I let them hit dead-ends. But when they see that they discovered an idea that was awarded a Nobel Prize a few years ago, it makes me so proud, and it works every time! I really care about the class being interactive, even though it’s more than 70 people in the room, there are always students who are willing to speak up. Throughout the course we learn various methods to make predictions and techniques to predict outcomes in behavioral and strategic interactions in games. I try to make sure that students do not take any method for granted. So as soon as they become comfortable with a new technique, I point its limitations through examples. Ultimately, my hope is that they will develop a habit of looking creatively for the most effective method for a particular strategic interaction rather than using an algorithm for solving problems. I know that some people think that Game Theory relies on heavy math, but the main challenge is logic and not mathematics. To help students, I give them some tools through a list of 100 true or false questions that I have designed for the semester. I also teach students to successfully construct examples and counterexamples. And during few weeks I can see that they are able to produce beautiful counterexamples in the classroom. I am hoping this is something they carry beyond the course. This requires some confidence building also because you are defining something and you have many degrees of freedom and some students are more comfortable with questions that are well defined; there is a steps-based logic that they will be following, but model building gives you more flexibility but is also more challenging. So they develop confidence throughout the course which is part of the econ 521 training.
We have witnessed in this 2016 Democratic debate that Senator Bernie Sanders has been advocating for a paid family leave, similar to those that have been implemented in Europe for years now (Norway and Sweden to name a few). Being a mother for a beautiful 14 month old daughter, and a very successful and driven tenured professor, do you feel the necessity of having paid leave? In other words, how do you manage your time between work and home?
First of all my daughter brings me a lot of joy and this projects on everything that I am doing. I consider a paid leave to be a very personal choice and many parents may choose not to stop working. I was in the office until the last day, quite literally, and I was on skype with students and co-authors a couple of days after my daughter was born — I really cared about maintaining continuity at work and this was something important to me and it was completely feasible given the nature of my work. But what I do think is very important is giving new parents a more flexible schedule if the nature of the work allows it. The arrival of a child is a very important event in anybody’s life, it is a very heavy moment and it is important to let the parents fully absorb this happiness — to fully internalize it. I think the employers know that we are the ones who are obsessing on how to organize our time to be part of these exciting and consuming projects and at the same time be the best parents we can. Facilitating the transition towards a different schedule is essentially what it comes down to produce a more energized, happy and loyal employee. I do think that giving people an option to take a paid leave or allowing for a more flexible schedule that does not require time commitment, but allows for substituting your time throughout the day—or night— is very important.
This year, our theme is focused on women in Economics. Can you tell us about the nature of your involvement with this organization? And what are some difficulties that you have faced (if any) as a woman as you have advanced in your economics career?
Some of the most intellectual and impressive people I have interacted with in high school, college and graduate school were women. Quite honestly, it never occurred to me, even remotely, that my gender would be related to what we are doing professionally. Until at some point at the end of graduate school when I heard people talking about the issue. My view is as follows: if you don’t know what to make of the whole women in sciences or women in econ discussion, grow thick skin! Focus on what is really important to you, what your ideas and dreams are and pursue them. Don’t let distractions get into your head. I am of course aware of the women in economics initiative and we are all very excited that the initiative took off and it appears to be a huge success. On most campuses these organizations are run by students and this informal format seems to be the most effective and impactful way to create a platform to share ideas with them and get them involved. Here at UW, we are lucky to have Susan Herring and Maria Muniagurria who have created an interactive community on campus. We are very proud and supportive of their work and efforts.
Do you have any advice for students who are currently majoring in economics? Anything that they should do that you have not maybe taken advantage of when you were an undergraduate?
One hundred years ago when I was in college, I didn’t really have access to information and there is an element of luck for how things turned out for me; I happened to be in the right place at the right time. Today students have better access to information. My advice for students is to not to wait for luck. Think about what you want to be in 5 or 10 years from today; take advantage of the resources that we have on campus– we have fantastic career services. And also, reach out to faculty, we are happy to talk to students. This is why we are here, we love interacting with you. We all have some experience that we can share and maybe part of it will be useful for you, but also talk to other people who have worked on something that is related to what you are thinking about. Passing your experience to others who want to learn is perhaps the most valuable source of information.
I had a female student come by my office and after talking to her I asked her “what is next for you?” She said that she is thinking about applying to graduate school for economics but she thought it would be “really competitive”. I told her to go for it and I hope she is reading this article, but what was going through my head was that we were only in the third week of classes and I can already tell that she was one of the most brilliant people in the room. Of course applying to graduate school is competitive, plus this is econ, a degree that is valued in the market, so of course the application process is competitive. But it is not any less competitive to other people than it is to you! I strongly encourage you to try and chase your dreams!
Read the full article at: https://issuu.com/uwequilibrium.com/docs/eq_articles/25