A commitment problem exists when people cannot achieve their goals because:
A. they do not have the first-mover advantage in a sequential move game.
B. they cannot play their dominant strategy.
C. the payoff matrix is unknown.
D. they cannot make credible threats or promises.
Answer: D
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Surplus value that is lost because something is keeping the market from functioning as well as it can is called
A) a tax. B) a subsidy. C) rent seeking. D) deadweight loss.
Less money means ________ interest rates, which ________ spending
A) lower; stimulates B) lower; reduces C) higher; stimulates D) higher; reduces
Scarcity can be eliminated by
A) abolishing competition. B) abolishing capitalism. C) abolishing money. D) all of the above. E) none of the above.
The key difference between classical and Keynesian macroeconomists is their differing beliefs about
A. the natural rate of unemployment. B. the speed at which prices adjust. C. the full-employment level of output. D. the slope of the aggregate demand curve.