Chapter 1 Flashcards
Rational Choice Theory
a framework for understanding social or economic
interactions in which individuals are predicted to choose strategies that maximize their
own expected benefits.
Voting Cycles
can occur even with perfectly democratic decision rules in place
collective action problem
refers to the difficulties faced by a group trying to
provide a public good.
Public Goods
non-excludable benefits that are non-rivalrous (meaning my use of the good does not diminish yours).
Free Riding
People who don’t pay the cost for the good can still enjoy them, so there is no incentive to pay.
Solutions: Offer selective benefits such as-
stickers, calendars, and feeling good.
Selective benefits are excludable.
Moral Hazard
one does not have the expertise to tell whether the agent performs the task correctly or portrays an accurate cost
Adverse selection
one may not be able to tell good from bad agents. (ex: Who wants insurance?)
Politics
The process through which agreement is reached on a course of common/collective action despite disagreements.
Democratic Politics
Citizen participation in decision-making with ex ante uncertainty and ex post irreversibility. Conflict at the ballot box and not in the streets.
Political Institutions
The set of rules and norms that dictate possible actions and thus influence outcomes.
Institutional Design
Creating a set of rules and norms by which decisions are reached and actions taken.
Preferences
What an individual or group “wants”.
Ex: $, Social Outcomes, Levels of Regulation, etc.
Incentives
Rewards for a given action.
Enticements in a bargain. (carrot/stick)
