Journal Topic #17: Tragedy of the Commons Experiment

Journal Topic #17: Tragedy of the Commons Experiment
No one took too many fish at my lake, each person took just enough for them to survive in the game, and no more. I thought it was very fair and calculated. None of us tried to take as much as possible until the last round of the experiment. We were very conservative in the beginning stages because of the set up of this experiment. Each round we would get double what we had the previous round, so by conserving the most amount of fish, we had the greatest gain for the future rounds. And in the last round, there was no more that we could possibly gain, so we took all of them. Society had almost no role in this, since we all cooperated. In game 2, we trusted one of the members (very foolishly), Brandon, and only one member would take the fish and the rest would abstain and theoretically die. This produces the maximum amount of social benefit considering that he would share it in the end (supposedly). However, he messed up and died. It makes almost no difference to know the reward, as long as the participants know that it is a good reward, and not a bad one, keeping each individual's self interest in mind. It is impossible to maximize the number of fish per person and the number remaining in the pond, because this is an inverse proportion, as more fish are distributed to the people, there are less and less in the pond. An example of this is college admissions, there are a limited amount of spots for students to enroll in the college courses. So, as more and more students want to enroll, the chance of getting in reduces, so the standards for the colleges get higher and higher. In the long run, the best thing for society, thinking in terms of the best interest of all the individuals, is to not study at all, and each person will remain at the level that they would have been if they all studied.

Journal Entry #16: Topic: Game Theory and Chicken

Journal Entry #16: Topic: Game Theory and Chicken 

I think that the assumption that people make rational decisions is correct; however, in who's best interest are the rational decisions made? The bad outcome isn't always inevitable. On the first time it is almost always inevitable. However, if the participants are able to communicate with each other and reach a settlement where the society benefits, a better outcome is possible. However, the problem is getting the participants to trust each other and keep the society's best interests in mind. Often times, this situation is done with prisoners, but it can also be used for economic decisions. This is called the prisoner's dilemma. The reason why the prisoner is most likely to achieve the bad outcome is because that is their own best individual choice. And that is the same for the other prisoner. With communication, they can both help each other and reduce the social loss by staying quiet, or not cheating. In the video, Nash says that the best outcome can occur if all of the guys work together. Because they already have no chance with the cute girl, they should just go for their second pick. So the second pick isn't offended because she was chosen first, and the first cute girl doesn't have multiple guys trying to chat her up, so that it is possible for one person to get her. However, if everyone goes for the cute girl, they will all get rejected, and their second picks will be offended because they were picked second, and none of the guys get laid (in this hypothetical situation, there could be some serious players).

journal topic #15: What is a monopoly

Journal Topic #15: What is a Monopoly

A monopoly usually has 1 seller in a market, a unique market with no close substitutes, and barriers to prevent entry. A monopoly wants to maximize profit, so they produce at the point where marginal revenue is equal to marginal cost, and they charge the most that they can for it, the monopoly price. A monopolistic firm can keep on earning economic profit in the long run, because there are barriers to entry and the economic profit will not fall definitely. The benefit to society is the variance that they get out of this, monopolies are encouraged to constantly innovate their products in order to keep earning economic profit, and the public gets better products to buy. A monopoly transfers consumer surplus to producer surplus. But economists don't think that this is wrong, they find fault with inefficiency, which arises because of the barrier to entry. Monopolies can also be good when they produce a product at the lowest possible cost and are able to sell to the consumers at a lower price than their competitors, this is called a natural monopoly. I don't think that it is worth it if the monopoly has to keep on spending all of their money to keep the monopoly, the money seems wasted.