EC1A3.1 - Block 1 Intronomics Flashcards Preview

LSE EC1A3 > EC1A3.1 - Block 1 Intronomics > Flashcards

Flashcards in EC1A3.1 - Block 1 Intronomics Deck (25)
Loading flashcards...
1
Q

What is meant by gamification?

A

Gamification (to gamify) is to make an activity more like a game in order to make it more interesting or enjoyable by incentivising people’s engagement in non-game contexts and activities by using game-style mechanics.

2
Q

What is Microeconomics?

A

Microeconomics starts at the level of individual decision-making and is the study of individuals, households and firms’ behaviour in decision making and allocation of resources. It generally applies to markets of goods and services and deals with individual and economic issues and how individual goals aggregate the behaviour of individuals.

3
Q

What is positve economics?

A

Positive economics is objective and fact-based which is concerned with the development and testing of positive statements/predictions that are verifiable and measurable using data. Positive statements can be tested, at least in theory, if not always in practice.

POSITIVE ECONOMICS - What do people do? Objective.

4
Q

What is normative economics?

A

Normative economics is subjective and therefore derived from an opinion or a point of view. Thus the words ‘should’, ‘ought to’ or ‘it is better to’ frequently occur. Normative analysis evaluates different policies and situations with respect to a particular notion of welfare yet the validity of normative statements can never be tested.

NORMATIVE ECONOMICS - What should people do? Subjective, depends on the notion of welfare!

5
Q

Positive or Normative: What is the effect of an increase of 1% income tax on the probability that superstars migrate away from the country?

A

POSITIVE QUESTION

6
Q

Positive or Normative: What can we say about this effect on lower earners?

A

POSITIVE QUESTION

7
Q

Positive or Normative: How should the government take the results of this paper into account when setting its tax policy?

A

NORMATIVE QUESTION

8
Q

Positive or Normative: Are people better off if they know their habit-formation tendencies?

A

NORMATIVE QUESTION

9
Q

Positive or Normative: Are people aware of their habit-formation tendencies when they sign up to the gym?

A

POSITIVE QUESTION

10
Q

Positive or Normative: What accounts for the price schedules of gyms?

A

POSITIVE QUESTION

11
Q

Positive or Normative: Should the government interfere in the market for gyms, given the findings of this paper?

A

NORMATIVE QUESTION

12
Q

What is adverse selection?

A

Adverse selection refers generally to a situation in which sellers have information that buyers do not have, or vice versa, about some aspect of product quality. In other words, it is a case where asymmetric information is exploited.

13
Q

What is asymmetric information?

A

Asymmetric information, also called information failure, happens when one party to a transaction has greater material knowledge than the other party.

14
Q

What is moral hazard?

A

Moral hazard is the risk that a party has not entered into a contract in good faith or has provided misleading information about its assets, liabilities, or credit capacity. This revolves around the question “How do different incentives affect the behaviour of people?”.

15
Q

What is equilibrium?

A

Equilibrium is a situation in which everyone is simultaneously optimising, i.e., when no individual thinks he/she has another course of available action that is better for them.

An equilibrium is part of Positive analysis in economics, it predicts what will happen in certain situations. Note that this does not mean people are happy in equilibrium nor that this is in any way “best” for everyone.

EXAMPLE. The Prisoner’s dilemma.

16
Q

What is the case of Kitty Genovese?

A

In the early hours of March 13, 1964, Kitty Genovese, a 28-year-old bartender, was stabbed outside the apartment building where she lived in the Kew Gardens neighbourhood of Queens in New York City, New York, United States. Two weeks after the murder, The New York Times published an article claiming that 38 witnesses saw or heard the attack, and that none of them called the police or came to her aid.

The incident prompted inquiries into what became known as the bystander effect, or “Genovese syndrome”, and the murder became a staple of U.S. psychology textbooks for the next four decades. However, researchers have since uncovered major inaccuracies in the New York Times article. Police interviews revealed that some witnesses had attempted to call the police.

17
Q

What is the bystander effect?

A

The term bystander effect refers to the phenomenon in which the greater the number of people present, the less likely people are to help a person in distress. When an emergency situation occurs, observers are more likely to take action if there are few or no other witnesses. Being part of a large crowd makes it so no single person has to take responsibility for an action (or inaction).

There are two major factors that contribute to the bystander effect. First, the presence of other people creates a diffusion of responsibility. Because there are other observers, individuals do not feel as much pressure to take action. The responsibility to act is thought to be shared among all of those present.

The second reason is the need to behave in correct and socially acceptable ways. When other observers fail to react, individuals often take this as a signal that a response is not needed or not appropriate.

18
Q

What is a digital bystander?

A

A digital bystander follows the same concept of a bystander except they’re witnessing the event through technology like a live stream or they’re witnessing the event in person and instead of intervening or calling for the police, they’re recording the event.

Similarly, social media creates large audiences which may attract criminal content which goes often neglected and unpatrolled. Is there a tolerance for violence, bullying and crime online? Is this the moral decay of the digital generation?

19
Q

How do sociologists explain the case of Kitty Genovese?

A

Sociologists think in terms of groups and culture.

  • The reason this happened is cultural, has to do with where it happened.
  • Public apathy and moral decay of urban life.
  • Ethnocentricity?
20
Q

How do psychologists explain the case of Kitty Genovese?

A

Psychologists think in terms of individual behaviour.

  • What happens to the probability an individual responds, p?
  • The reason this happened is due to some universal behavioural effect of human behaviour.
  • Diffusion of responsibility.
  • Test theories with staged examples (fake emergencies), yet it is negative as they pollute the subject pool: i.e can’t have test subjects back again as they lose trust.
21
Q

How do economists explain the case of Kitty Genovese?

A

Economists think in terms of understanding social outcomes based on a theory of individual behaviour. Game theory is a set of modelling tools to achieve this.

The probability that someone called the police:

  • Each subject helped with probability p.
  • Probability that no one helped is (1-p)^n.
  • Therefore, the probability that at least one helped is: P(at least 1)=1-(1-p)^n
22
Q

What is a public good?

A

In economics, a public good refers to a commodity or service that is made available to all members of society. Typically, these services are administered by governments and paid for collectively through taxation.

Examples of public goods include law enforcement, national defence, and the rule of law. Public goods also refer to more basic goods, such as access to clean air and drinking water.

23
Q

What is nash equilibrium?

A

Nash equilibrium is a concept within game theory where the optimal outcome of a game is where there is no incentive to deviate from the initial strategy.

Overall, an individual can receive no incremental benefit from changing actions, assuming other players remain constant in their strategies. A game may have multiple Nash equilibria or none at all.

Based on:

  1. Rationality
  2. Beliefs are correct
24
Q

How do you define conjecture?

A

A conjecture is a conclusion that is based on information that is not certain or complete.

25
Q

What is the Equilibrium Condition?

A

If 0 < p < 1, then it must be that the neighbour is indifferent between calling or not calling

  • Payoff from calling = X-1
  • Payoff from not calling =(1-(1-p)^n-1 )×X
  • X-1 = (1-(1-p) )×X