ECON 461 REVIEW SHEET

ECON 461 REVIEW SHEET - ECON 461 REVIEW SHEET 1. Why did we...

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Unformatted text preview: ECON 461 REVIEW SHEET 1. Why did we see an explosion of social regulation in the 1970s - In the 1960sindividual rights era rights that government had to protect was one of the things that led to the explosion. The civil rights movement provided both a model and an inspiration, helping to breed distrust of established institutions and to suggest the possibility of large-scale change through law. A key contribution was to expand the possibilities of conceiving of certain interest as rights- The nature of risk related judgments, in the 1970s within the public at large - The response of public officials one that did not involve anything like a careful analysis of the consequences of different approaches to regulation. It involved a quest for public credit and acclaims not an assessment of the scientific and economic variable involved. Legislators/ regulators placed a high premium on the need for large scale responses to neglected problem. Companies should be required to do whatever they can to reduce risks to safety and health. A lot of it was a result of politicians perception of what people wanted. There was a demand from the population for risk prevention and reduction and politicians were there to supply it 2. Why do people (smart, rational people) make bad decisions concepts explained by Sunstein. You could think about why this is important- Availability heuristic- this problem is cognitive, people tend to think that events are more probable if they can recall an incident of their occurrence. Hence highly publicized events are likely to lead people to be exceedingly fearful of statistically small risks. Emotion also plays a large role here, if people can often visualize the worst case they are likely to be quite alarmed and assessments. Lawmakers and officials in the same respect are highly reactive to public alarm. Judges and juries also take phantom risks seriously.- Intuitive toxicology people use mental short cuts that lead to errors. Many people believe risk is an all or nothing matter, many people believe in the benevolence of nature (products of human are more likely to be dangerous than the products of natural processes), many people believe in zero risk mentality they believe it is possible and appropriate to abolish risk entirely. Experts believe these factors are false and often suffer from affiliation bias- they believe in what their institution would want them to believe.- Social cascades: a large majority of people come to accept a certain belief simply because of what they think other people believe. E.g. mad cow disease. The fact that many people believe in something preventing you from voicing your opinion even if you disagree- Group polarization: is the typical result of deliberation, which moves people toward in a more extreme point in the direction that they were already heading....
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ECON 461 REVIEW SHEET - ECON 461 REVIEW SHEET 1. Why did we...

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