Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?
A) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology.
B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for $3,000 even though he would not have paid $3,000 for a ticket if he had not won the lottery.
C) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity.
D) While playing the ultimate game, an allocator decides to share $20 equally with a recipient rather than keep the $20 for herself.
A
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With respect to events like global warming, some economists suggest using falling discount rates because
A) exponential discounting virtually gives no weight to (large) costs incurred far into the future. B) exponential discounting weights (large) costs incurred far into the future heavily. C) events far in the future do not affect us. D) we should not care about costs far in the future.
If you take a maximin strategy
A) you are irrational according to economic definition. B) you are ensuring that the other player gets the worst possible outcome. C) you are getting the best possible outcome given that the other player does the thing that's worst for you. D) then both players are doing the best they can given the payoffs in the game.