Week 2 Flashcards
What is a social dilemma
a situation in which actions taken independently by self-interested individuals result in socially suboptimal outcome
eg. climate change or traffic jams
what is the tragedy of the commons
common property or common resources are often overexploited
think old time example of common pastures and sheep
what is free riding?
a few bear the costs while everyone enjoys the benefits
In game theory what is a player
a player is someone who is involved in the interaction
in game theory what is a feasible strategy
the actions each player can take
in game theory what is the information
what each player knows when choosing their action
in game theory what is the payoffs
the outcomes for every possible combination of actions
in game theory what is a one shot game
when the players only interact once
in game theory what is the best response
the strategy that yeilds the highest payoff, given the others players strategy
in game theory what is the dominant strategy
a best response to all possible strategies of the other player
In game thoery what is the dominant strategy equilibrium
an outcome of a game in which everyone plays their dominant strategy
What is the nash equillibrium
a set of strategies - one per player - such that each players strategy is the best response to the strategies chosen by everyone else
no player has an incentive to deviate unilaterally
there may be more than one nash equilibrium
What is the prisoners dilemma
a game with a dominant strategy equillibrium in which player the dominant strategy yeilds lower individual and total payoffs compared to other strategies
socially optimal outcome is not achieved
What is the invisible hand
Adam Smith
conditions under which individuals pursuring their own interests, without regard for the interests of others can be consistent with the common good
under the right laws and economic institutions (pp and competition) the economy would be guided towards a socially beneficial outcome
what is a self-interest preferences
when a person with self-interested preferences choose to take some action, she only accounts for how it affects her personally ignoring the effects on others
what is a social preference
a person with these preferences cares not only about how her action affects her personally but also about how it affects other people
What is the public goods game
the prisoners dilemma in which there are more than two players
what is altruism
a willingness to help someone else at a cost to yourself
what is repcoricty
a desire to help those who have in your opinion acted well and to harm those who have acted poorly
what is inequality aversion
a dislike of unequal outcomes even if you benefit from the disparities but especially if others are doing better than you
what is a nash equilibrium
A set of strategies, one for each player in the game, such that each player’s strategy is a best response to the strategies chosen by everyone else.
in game theory how do you make players pay for the consequences of their actions
repeated games
social norms
peer punsihment
what is the dictator game
a decider is given money by the experimenter
decider chooses whether to allocate the money to the recipient and how much
the recipient cannot respond
what is the ultimatium game
decided is given money by the experimenter
decider chooses whether to allocate money to the recipient and how much
recipient can accept or reject the money - if rejects then neither gets the money
what is the relationship b/w nash equilirbium and the dominant strategy
a dominant strategy is the best response to all strategies by the other players, a dominant strategy equilibrium therefore must be a nash equilibrium
what is the hawk-dove game
the hawk is the aggressive player and the dove is the peaceful species
in terms of climate change the dove restircs and the hawks continues with BAU - conflict of interest here is that each country does better if it plays hawk while the others play doves
different from other nash equilibrium games as the players adopt two different strategies
What are ostroms principles for managing a commons
there are 8 btw
- define clear group boundaries
- match rules governing use of common goods to local needs and conditions
- ensure that those affected by the rules can participate in modifying the rules
- make sure the rule-making rights community members are respected by outside authorities
- develop a system, carried out by community members, for monitoring members behaviour
- use graduated sanctions for rule violators
- provide accessible, low cost means for dispute resolution
- build responsibility for governing the common resources in nested tiers from the lowest level up to the entire interconnected system
these are dependent on the context - it is possible to find a common good
what are the solutions to the climate change game
technology
- clean tech like offshore and tidal are good technology to focus for growth in the UK
co-benefits
- govt should focus on clean even if they are only interested in promoting growth
- clean tech is a good technology to focus on leveling up
transfers
