Economic agents (for example, consumers or firms) often do things that at first glance seem to be inconsistent with their self-interest
People tip at restaurants and when they are on vacation even if they have no intention to return to the same place. Firms, sometimes, install costly pollution abatement equipment voluntarily. How can these deviations from Nash predictions be explained?
There are several possible explanations. Firms might voluntarily install pollution abatement equipment if they believe consumers will eventually learn about the firm's polluting behavior and stop buying its products. In some cases, the payoffs may be more complex than just monetary payoffs. For example, people may care about the net benefits that someone else receives. If this is the case, then behavior may reflect social preferences, meaning that the individual's benefits are defined not only by his own payoffs, but also by the payoffs of others. In other examples the implications of a repeated relationship are very different from a game that is played just once.
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A share of common stock is a claim on a corporation's
A) debt. B) liabilities. C) expenses. D) earnings and assets.
The U.S. tax code
a. all of the reasons given as answers b. to social engineer c. to raise revenue for government spending d. is used to help politicians get elected.
At its regular meetings, the FOMC decides to sell or buy government bonds, an action referred to as ______.
a. reserve requirement alterations b. open market operations c. discount rate management d. interest rate changes
This curve shows there is a(n) ______ relationship between the quantity of real GDP supplied and the overall price level.
a. neutral
b. positive
c. inverse
d. complementary