Club Minimum

Cam and Mitch are having a nice breakfast with Jay, but it turns out jay only invites them to breakfast because he has to meet a club minimum in order to keep his membership. We learn that Jay also buys people gifts from the club shop so that he can help his balance and even offers to get Cam and Mitch some spa services. This incentive mechanism by the club ensures that people aren’t just joining the club for the golf perks, which have relatively low profit margins.

See more: altruism, gift giving, incentives, self interest

The Golden Apple Award

Cam has setup a panel that includes Alex, Haley, Manny, and Luke. His original goal was to showcase alternative options beyond college for the high school. It turns out the principal isn’t a fan of that idea, but only because he’s more interested in winning the “Golden Apple” award, which is for schools that have 60% of their class going on to college. His self-interest may push some students into a path that they aren’t meant to be on.

At the start of the scene, we learn that Cam’s not sure he believes everyone should go to college, but he isn’t sure how to proceed once he finds out that his principal is encouraging him to only talk about the benefits of college. Midway through the show, Mitch convinces Cam that if he can make it wear the principal doesn’t get the Golden Apple award, Cam may be promoted to Head Principal which comes with more perks. Cam goes along with it, and switches the theme of the panel to focus on non-college options.

See more: college, education, human capital, human capital investments, incentives, self interest, signaling, signals, skill building

Framing a Yard Sale

Luke and Manny’s class is having a yard sale to benefit UNICEF. When Mitchel doesn’t want to donate Cam’s pants, Luke tries to re-frame the charity attempt to guilt his uncle into donating more money. Framing is one tactic to get people to do something they may not have done under the original design.

See more: altruism, behavioral, charity, framing, incentives, inequality, poverty

Yard Sale for UNICEF

Luke and Manny’s class is having a yard sale to benefit UNICEF. Manny thinks the point is for them to learn about global altruism, while Luke thinks to point is to beat the other class. The teachers have used the incentive of a pizza party in order to encourage their classes to do their best in raising money. Jay is unhappy with this method and would prefer to write a check instead.

See more: altruism, charity, donations, incentives, self interest

Hiring Haley

Luke hires Haley to work for him at the golf club. Sometimes, her service is a little off putting but she is still his best worker and brings in good tips. She’s going through the process so that she can save up and move out of her parent’s home.

See more: incentives, labor market, savings, training

Untested Stickers

Haley works for a lifestyle company with a history of selling dodgy products. The latest one is stickers that improve people’s moods. Haley’s boss wants them tested, but can’t use animals so she uses the next best thing – her assistants.

This clip demonstrates the importance of labor law and regulations. Without enforceable regulations, some employers might require workers to complete dangerous tasks. Even with regulations, this still happens. Haley’s boss may know about the danger of the product and the importance of regulation, but perhaps doesn’t care?

See more: entrepreneurism, incentives, labor law, product differentiation, rationality, regulation, safety, testing

Preferences and Tradeoffs for Cal Tech

Alex is graduating from high school soon so Phil, Claire and the kids are visiting Cal Tech. Claire thinks Cal Tech is the perfect place for Alex but she’ll find out soon that she and Alex have different preferences. College is one of the ways that we build human capital. As we learn more things, we become more productive and our labor is more valuable. Alex is already really bright and loves academics so college is a good fit to set her up for doing impressive things in the future.

Claire wants a great school that’s close. Alex wants a great school that’s far away. We also learn that Cal Tech has 5 Nobel Laureates on staff, suggesting that Cal Tech itself has a lot of human capital, making it a highly productive college.

Alex learns why Cal Tech might be a better choice for her than an East Coast school. What is more important: the quality of the program or proximity to home? Choices are tough and everything has a cost. Here’s Alex’s current dilemma: stay close to home and attend the best program in the country OR go to a college on the east coast with a weaker program.

See more: cost benefit analysis, incentives, human capital, nonpecuniary benefits, opportunity cost, preferences, self interest, school choice, signaling, skill building, tradeoffs, utility

Everyone Confess!

When Claire and Phil cancel Christmas after finding what looks like a cigarette burn in the sofa, Alex suggests she and her siblings all confess so that their parents will reinstate Christmas and go easy on them for protecting their siblings. Unfortunately there is an incentive to cheat, but Luke isn’t smart enough and ends up confessing to something he didn’t do.

See more: cooperation, game theory, incentives, prisoner’s dilemma, sequential moves, simultaneous moves

Gentrification & Cupcakes

Manny lost Luke in a “sketchy” neighborhood. He and Phil enlist Gloria’s help to track him down. When they arrive in the neighborhood, they find that it has changed quite a bit since Gloria lived there. When searching for a girl, they have the option of visiting one of the four area cupcake stores, each specializing in a different area.

See more: gentrification, growth, imperfect competition, incentives, income inequality, market structures, monopolistic competition, preferences, product differentiation

Training a Champion

Jay takes Joe out to the driving range and discovers that Joe is a natural. Joe’s natural skill is a form of human capital that gives him the potential to earn a large salary in the future. Human capital is often acquired through years of training, education and hard work. But sometimes, luck gives some people an edge over others. If Joe works hard and practices, he could follow the path of other young golfers with natural talent like Tiger Woods and Lexi Thompson. Jay wants to do all he can to make that happen.

See more: human capital, incentives, income inequality, labor, productivity, tournaments, wages, winner take all

Healthy Competition

Economists often suggests that competition improves efficiency in markets and Jay seems to agree. He fosters competition within his family to help them achieve their goals. At this moment in the episode, he appears that his motivation worked out and everyone has been successful, but later in the episode, we find out that there were some unintended consequences of his actions.

See more: competition, extrinsic rewards, incentives, intrinsic rewards, labor, motivation, perverse incentives, unintended consequences

Unhealthy Competition

Economists often suggests that competition improves efficiency in markets and Jay seems to agree. He fosters competition within his family to help them achieve their goals. In an earlier scene, we learn that Jay withholds praise to encourage his family, but this year they have all seemingly surpassed his expectations. But are they really achieving those goals? The truth comes out in this clip. It turns out that they’re a family of cheaters and not a family of winners. Jay’s decision to incentivize them with praise has some stark unintended consequences.

See more: cheating, competition, ethics, incentives, moral hazard, motivation, self interest, unintended consequences