Exam 18: Social Economics

Ron decided to sell a particular stock when he found out that many other people were selling it.This is an example of ________.

Scenario: Your car broke down while you were driving to the office one morning. You took it to the nearest service center and were told by the mechanic that you need to pay $500 for the repair. You are uncertain about whether to trust him. If you do not trust him, you have to take it to another service center, which is far away and inconvenient. If you trust him, he can either cooperate or defect (do an honest job or not). If he does an honest job, both of you will gain from the trade. If he does not do an honest job, he will gain $500 while you will lose your money. Clearly, he will gain more by defecting rather than by cooperating with you. -Refer to the scenario above.Which of the following is likely to happen if the service center has a reputation for trustworthiness?

Scenario: Roger and Billy are two colleagues who were caught by their boss for forging an important document together and have been taken to separate rooms for interrogation. They are told that if both of them confess their crime, they will be charged a fine of $2,000. If neither of them confesses, they will be fined $1,000 each. However, if one of them confesses while the other does not, the one who confesses will be set free but the other will be fined $3,000. -Refer to the scenario above.Which of the following is true in equilibrium?

A manufacturer of a sugar substitute has launched a campaign against the consumption of sugar.This is an example of ________.

Scenario: Elly owns a small coffee shop. She has only one employee. One weekend, she decides to take a break from work. She is wondering whether she should trust her employee to run the shop in her absence. If she does not trust him, she would have to keep the shop closed, in which case neither she nor her employee will be able to make money. In contrast, if she trusts him, he can either cooperate and run the shop or he can defect and steal from the shop. If he cooperates, both of them will earn money. If he steals from the shop, he will make more money while she will lose. -Refer to the scenario above.Which of the following will hold true if Elly is known to be vengeful?

Scenario: Your car broke down while you were driving to the office one morning. You took it to the nearest service center and were told by the mechanic that you need to pay $500 for the repair. You are uncertain about whether to trust him. If you do not trust him, you have to take it to another service center, which is far away and inconvenient. If you trust him, he can either cooperate or defect (do an honest job or not). If he does an honest job, both of you will gain from the trade. If he does not do an honest job, he will gain $500 while you will lose your money. Clearly, he will gain more by defecting rather than by cooperating with you. -Refer to the scenario above.You should use ________ to make your decision.

Scenario: You walk onto a used car lot to buy a car. You are willing to pay up to $15,000 for a car of good quality, but you value a lemon at $0. You are now wondering whether you should trust the car dealer when it comes to the quality of his cars. If you choose to trust him, he can choose to cooperate or defect. If you do not trust him, he will not earn any money and you will not be able to buy a car. If you trust him and he cooperates, both of you will gain, because the dealer values a good-quality car at $13,000. However, if he defects, he will earn $15,000, while you will not derive any satisfaction. -Refer to the scenario above.Which of the following is true in equilibrium?

Scenario: Tom and Harry are participating in a game in which the participants are divided into groups of two. Tom and Harry have been put in the same group. In each round of the game, Tom will be given an item. Tom can either give it to Harry or pass it on to the next team. If he decides to pass it on to the next team, neither of them will get the prize. If he gives it to Harry, Harry can either pass it on to the next team or sell it himself. If he passes it on to the next team, each of them will get $100. However, if he decides to sell it, he will get an amount higher than $100 and Tom will get nothing. -Refer to the scenario above.Tom should use ________ to play this game.

Hedge funds often buy the same stocks and track one another's investment strategies.This is an example of ________.

Scenario: You walk onto a used car lot to buy a car. You are willing to pay up to $15,000 for a car of good quality, but you value a lemon at $0. You are now wondering whether you should trust the car dealer when it comes to the quality of his cars. If you choose to trust him, he can choose to cooperate or defect. If you do not trust him, he will not earn any money and you will not be able to buy a car. If you trust him and he cooperates, both of you will gain, because the dealer values a good-quality car at $13,000. However, if he defects, he will earn $15,000, while you will not derive any satisfaction. -Refer to the scenario above.Which of the following will happen in equilibrium?

Robert is interviewing a candidate for employment in his company.He believes that the applicant is highly intelligent.Robert only pays attention to information that is consistent with his belief.This is an example of ________.

What are the two ways by which people can help charitable causes?

People giving to charity because of selfish reasons,such as the appearance of generosity,is categorized as ________.

Differentiate between the two types of altruism.

Scenario: Phillip and Joseph are two classmates who represented their college in a quiz competition as a team and won $500. The winning amount was handed over by the organizers to their professor, who had accompanied them. The professor gave the money to Phillip and asked him to offer any amount he wants to Joseph. If Joseph accepts the offer, the money would be split in the decided proportion between them. However, if Joseph rejects the offer, the money would go to their college fund. -Refer to the scenario above.If Joseph prefers fairness to money,________.

Scenario: Roger and Billy are two colleagues who were caught by their boss for forging an important document together and have been taken to separate rooms for interrogation. They are told that if both of them confess their crime, they will be charged a fine of $2,000. If neither of them confesses, they will be fined $1,000 each. However, if one of them confesses while the other does not, the one who confesses will be set free but the other will be fined $3,000. -Refer to the scenario above.If the colleagues had decided on a fairness penalty of $5,000 before committing the crime,________.

Scenario: Phillip and Joseph are two classmates who represented their college in a quiz competition as a team and won $500. The winning amount was handed over by the organizers to their professor, who had accompanied them. The professor gave the money to Phillip and asked him to offer any amount he wants to Joseph. If Joseph accepts the offer, the money would be split in the decided proportion between them. However, if Joseph rejects the offer, the money would go to their college fund. -Refer to the scenario above.This is an example of ________.

Scenario: Your car broke down while you were driving to the office one morning. You took it to the nearest service center and were told by the mechanic that you need to pay $500 for the repair. You are uncertain about whether to trust him. If you do not trust him, you have to take it to another service center, which is far away and inconvenient. If you trust him, he can either cooperate or defect (do an honest job or not). If he does an honest job, both of you will gain from the trade. If he does not do an honest job, he will gain $500 while you will lose your money. Clearly, he will gain more by defecting rather than by cooperating with you. -Refer to the scenario above.Which of the following will be true if the service center has a reputation for trustworthiness?

An economist is conducting a survey to evaluate a program launched by the government.She ends up collecting data from those households that were adversely affected by the program,reaffirming her own belief that the program has been largely unsuccessful.This is an example of ________.

Scenario: Robert and Alice are participating in a reality show on television. Robert is offered $500 and is told that he can keep the money as long as he shares some of it with Alice. Robert can offer Alice as much or as little as he likes, but if Alice rejects his offer, neither of them will get to keep any money. -Refer to the scenario above.This is an example of ________.