Exam 14: Selfishness and Altruism

Consider equation 14.9, which shows how much a farmer is willing to contribute to flood control. How much is farmer $i$ willing to contribute if no other farmer has contributed?

A person who is willing to pay to make another individual better off is referred to as

There is a set of goods, $x=\left(x_{1}, x_{2}, \ldots x_{N}\right)$ . Trudy can only afford $x_{1}, x_{4}, x_{N-1}$ . Trudy directly reveal prefers $x_{1}$ over $x_{4}$ , and $x_{4}$ over $x_{N-1}$ . Write out, in words, what must be true for Trudy's preferences to satisfy GARP.

Social preferences are a wide class of preferences in which the decision-maker has preferences that incorporate the well-being or actions of other individuals.

Marco's preferences are complete, but not transitive. Molly's preferences are complete and transitive. Molly is also altruistic towards Marco. Which of the following are true?

If Holly's utility increases when Ralph's utility increases, then Holly must be altruistic.

Consider the game in Figure 14.6. Suppose the final pay-off for player playing $L$ was (25.60, 13). Find the SPNE of the modified game.

Ola has utility function given by $u_{O}\left(w_{O}, u_{G}\left(w_{G}\right)\right)$ and Gina has a utility function given by $u_{G}\left(w_{G}\right)$ . Ola is altruistic if which of the following is true?

Suppose Dale has three goods in his choice set, a, b, and c, and Dale must choose one good from this choice set on each of three days - each day Dale makes a new choice. Dale has preferences such that $a \sim b \sim c$ . Dale can choose the same good every day or make a new choice every day. Suppose on the first day Dale chooses $a$ , on the second day he chooses $b$ and on the third day he chooses c. Dale's preferences satisfy WARP.

In the dictator game, the only subgame is the entire game.

There is a set of goods, $x=\left(x_{1}, x_{2}, \ldots x_{N}\right)$ . Yolanda can only afford $x_{1}, x_{4}, x_{N-1}$ . If Yolanda chooses $x_{1}$ then $x_{1}$ is directly revealed preferred to $x_{2}$ .

Willa and Lora are playing the dictator game. Let $w_{w}$ and $w_{L}$ be the amount of money Willa and Lora receive in the game, respectively. Willa's preferences are given by $U\left(w_{w}, w_{L}\right)=$ $\min \left(w_{w}, w_{L}\right)$ . Willa plays the role of the dictator and must decide how to split $\$ 10$ . How much will Willa keep and how much will she give to Lora?

Positional externalities always reduce an individual's utility.

Government contribution to a public good often results in less private contribution. What is this effect called?

Consider the utility function specified on page 14-17: $u(x, r, c)$ , where $x$ is the size of an individual's home, $r$ is their rank in home size relative to their neighbors, and $c$ is other goods. Which component of the utility function represents the notion of "other-regarding preferences?" a. $x$ b. $r$ c. $c$ d. The curvature of $u($ . $) .$

Consider the game in Figure 14.6. Suppose the final pay-off for player playing $L$ was (25.60, 13). This pay-off modification changes the SPNE of the game.

Consider the game in Figure 14.6. How many subgames does the game contain?

There is a set of goods, $x=\left(x_{1}, x_{2}, \ldots x_{N}\right)$ . Nicole can only afford $x_{1}, x_{4}, x_{N-1}$ . Give an example in which Nicole's preferences satisfy WARP, but are not transitive.

If Paula's preferences are complete and transitive, then all of the following must be true EXCEPT

Altruism violates assumptions of rationality.