Econ.docx - Paloma Velasco Armchair Economics ch Like...

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Paloma Velasco Armchair Economics ch. Like Dislike 1. “Most people respond to incentive” fundamental comment used to postulate how human behavior works and does hold validity as author points out. Seatbelts is an example, but they aren’t always a good thing Death penalty prevents 8 deaths. By that logic have more people in prison makes private prison owners more money. seatbelt paradox: they tend to reduce deaths by helping you survive it but also increase them by encouraging reckless behavior. People are still willing to take risks. Even if people bought less gas, that does not necessarily apply to everything. People buy overpriced things like water. There is a cultural trend to resent gas price increases. It is essentially un-american to pay too much. Does birth control then reduce the # of unwanted babies or encourage mindless behavior because it can be inconsequential for people who have access to it 2. Econ applies to some behavior but not all behavior. Thus, it is more enlightening to understand the multitude of situations where this does occur. Eg celebrity endorsement, not rational. All human behavior is rational: this is clearly not true, but for this case, a very simplistic explanation to go with the “incentives matter” chapter. Why is incentives the basis of rationality. What if those incentives are irrational. Promoters don’t want rich audiences, they want fantic ones. This shows outside rational one time decisions-, there is band loyalty which will benefit them in the long run. Your vote essentially won’t make a difference in the outcome of an election, even a close one. It is purely symbolic. 3. The system that you construct to solve one problem can be the source of another. This is kind of an example of unintended consequences Salaries can sometimes reflect corporate cronyism, but other evidence that is more overall enlightening is that it has to do with firm increase. Stockholders are making a bad mistake, while not acceptable to an economist, it still falls under the assumption that behavior is rational. Purposelessness may be the exact purpose. Vc The movie method is silly and cold, but holds true that sometimes selfish motives lead to honest revelations 4 People don’t all live in just one place because they have different preferences. And example of something that benefits no one is that dumb plant place by the river that just raised taxes or was subsidized either way. When it belongs to the city no one
benefits. Indifference principle: nothing can make you happier than the next best alternative. Features make your first shared preference second to the alternative. It is better for someone to reap the benefits than for no one to. Are there other alternative ways to view and allow for the public to benefit from resources and be better off, and is it taking into consideration immeasurable effects?

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