ecosoc interactions & game theory

Question 1

capitalism gives us (3)

Answer 1

1. division of labor
2. specialization
3. entrepreneurial inventions

Question 2

creative destruction

Answer 2

innovation produces winners and losers

Question 3

what do we need in capitalism? (3)

Answer 3

1. secure property rights
2. competitive markets
3. firms organized by non-market factors (not nepotism)

Question 4

political institutions X inequality

Answer 4

political institutions determine who within a country benefits from markets and can restrict certain groups from enjoying the benefits

Question 5

what is game theory?

Answer 5

a tool of social science used to examine strategic interactions between individuals/ groups

Question 6

invisible hand

Answer 6

individual incentives and following self interest can lead to a better society- when people are selfish it makes society better off

Question 7

elements of a game (4)

Answer 7

1. players
2. feasible strategies
3. information
4. payoff

Question 8

payoff matrix

Answer 8

a table of payoffs associated with every possible combination of strategies

Question 9

best response

Answer 9

highest payoff given the strategies the other players select

Question 10

dominant strategy

Answer 10

action that yield the highest payoff for one player no matter what the others do.

Question 11

dominant strategy equilibrium

Answer 11

an outcome in which every player plays their dominant strategy

Question 12

nash equilibrium

Answer 12

a set of strategies for each player such that no player has incentive to change their strategy given what the other players are doing.

Question 13

public goods

Answer 13

socially desirable products defined by; non-excludable (can’t prevent consumption by others), non rival consumption
*** everyone can use it and this doesn’t hinder access.

Question 14

examples of public goods

Answer 14

clean air and water, public radio, roads, bdridges, common currency

Question 15

how to overcome collective action problem (public goods game)?

Answer 15

1. repeated interactions by using sanctions or rewards
2. numbers of players: it’s easier when there are less actors
3. institutions - use governments to change the rules or act as a enforcer

Question 16

free ride

Answer 16

benefiting from the contributions of others to some cooperative project without contributing oneself.

Question 17

tragedy of commons - collective action difference?

Answer 17

in tragedy of commons we talk about rival goods.