Ch. 1 Practice

Ch. 1 Practice - Ch. 1 Practice Tuesday, January 18, 2011...

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Ch. 1 Practice Tuesday, January 18, 2011 11:33 AM The Prisoner's Dilemma Nash Equilibrium - both non conformity Transaction and Conformity Costs How do collective decisions get made? Transaction costs - partially voluntary o Resources required to make collective decisions Voting o Increase when the number of participants rise Conformity costs - mandatory o Costs participants in society would rather not pay Paying taxes Drinking age Transaction and Conformity costs are inversely related The spectrum : dictatorship at one end (all conformity costs) versus government by consensus (transaction costs, to come to a consensus it will take time) Attempts to manipulate transaction and conformity costs: o Designing the Constitution Command - able to dictate the actions of others Veto - president can veto, congress can override. veto is only a negative power - 'you cannot do this' Agenda Control - what are we going to talk about o Voting Rules Simple majority - majority rule refers to simple majority or one-half plus one Political equality Each voter carries same influence Same opportunity to participate Most widely shared preference will prevail Plurality o Delegation Principals & Agents - President (Principals) wants some agenda passed, and Agents make that happen for him. We are Principals - Congressmen are Agents Agency Loss - discrepancy between what you want, and what the Agent does Representative Government A blend of delegation and majority rule o Citizens select representatives o Representatives act as agents Deliberate and commit citizens to collective enterprises o Citizens want their agents to be faithful How? Elections o Private goods Market provides Food, cars, beer, iPhone Individually purchased, individually consumed o Public goods
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Nondivisible, non-excludable National safety, clean air and water Cost born collectively, everyone benefits o Mixed goods/collective UNC, state pays for some, but we pay tuition o Public "bads" or externalities Smoking and Polk Place Olson, The Logic of Collective Action o Should groups want to work together? o Do groups have a common interest? o Why belong to an organization? o Incentives for free riding o The state's role in fundamental services Provide noncollective goods as well in order to provide an incentive to join Hardin, The Tragedy of the Commons o Problem of conservation (natural resources) o More of a problem as population increases? "Overbreeding" Perhaps demonstrates lack of control o Oceans, national parks, others? What can we do?
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Ch. 1 Practice - Ch. 1 Practice Tuesday, January 18, 2011...

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