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Optimal Choices for Altruistic vs. Self-Interested Preferences in Zoë's Dilemma
A comparison of Zoë's potential choices in the lottery dilemma shows how her social preferences determine the outcome. If she acts altruistically, her optimal choice is point A, where she keeps £140 for herself and gives £60 to Yvonne, thus incurring a personal cost to benefit her flatmate. In contrast, if she were purely self-interested, her optimal choice would be point S, keeping the entire £200 prize and giving nothing to Yvonne.
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Introduction to Microeconomics Course
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CORE Econ
Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
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Optimal Choices for Altruistic vs. Self-Interested Preferences in Zoë's Dilemma
Zoë's Constrained Optimization Problem
An individual wins £200 and is deciding how much, if any, to share with a friend. The winner's personal satisfaction increases with both the amount of money they keep and the amount their friend receives. Suppose that just before the decision is made, the winner learns that their friend has unexpectedly received a separate £50 gift from another source. How would this new information most likely alter the winner's sharing decision regarding the £200 prize?
Analyzing Preferences in a Sharing Scenario
An individual with purely self-interested preferences wins a £200 prize. This individual would be indifferent between the outcome where they keep all £200 for themselves and an alternative outcome where they keep £150 and give £50 to a friend.
An individual with altruistic preferences wins a £200 prize and is deciding how to split it with a friend. The individual's happiness increases with both the amount of money they keep and the amount their friend receives. Given this, which of the following statements most accurately describes their likely decision-making process?
Inferring Preferences from Choices
An individual wins a £200 prize and is deciding how to allocate it between themself and a friend. The individual's preferences are altruistic, meaning their personal satisfaction is positively affected by both the amount they keep and the amount their friend receives. Given four potential scenarios, which outcome would result in the lowest level of satisfaction for this individual?
Evaluating Altruism from Observed Choices
An individual wins a £200 prize and must decide how to allocate it between themself and a friend. Match each of the following preference types to the allocation choice that an individual holding those preferences would most likely make.
Deconstructing an Altruistic Choice
Zoë's Feasible Set and Budget Constraint in the Lottery Dilemma
Altruistic Choice as a Decision Problem, Not a Game
Modeling Altruistic Choice as a Budget Allocation Problem
Social Preferences Determine Indifference Curve Shape (Figure 4.10)
Learn After
An individual, Alex, receives a $1,000 bonus for a project completed with a partner, Ben. Alex has the sole authority to decide how to split the bonus. Despite being able to keep the entire amount without consequence, Alex decides to keep $600 and give $400 to Ben. Based on this action alone, what can be inferred about Alex's preferences?
Analyzing Economic Preferences in a Bonus Scenario
Match each economic preference type with the scenario that best illustrates it.
Consider an individual with purely self-interested preferences who has the opportunity to split a $200 cash prize. They are presented with two choices: (A) keep all $200 for themself, or (B) keep $199 and give $1 to a stranger . According to the definition of purely self-interested preferences, this individual would be indifferent between choice A and choice B.
Evaluating a Financial Decision from Different Preference Perspectives
Imagine a scenario where a person has to decide how to allocate a $100 windfall between themself and a friend. The person's optimal choice results in them keeping $70 and giving $30 to the friend, even though they could have kept all $100. Which of the following statements provides the most accurate analysis of this choice?
Analyzing Economic Preferences in Action
An individual is given a $500 bonus to be allocated between themself and a teammate. The individual has complete control over the allocation. A purely self-interested person would keep the entire $500. However, this individual finds their own satisfaction is maximized by keeping $400 and giving $100 to the teammate. From the perspective of economic preferences, what does the $100 given to the teammate signify?
An individual has exclusive control over allocating a £200 prize between themself and another person. We can represent two possible allocations as follows:
- Allocation S: (£200 for self, £0 for other)
- Allocation A: (£140 for self, £60 for other)
If a person with purely self-interested preferences chooses Allocation S, and a person with altruistic preferences chooses Allocation A, which statement provides the most accurate analysis of their satisfaction (utility)?
An individual has the sole authority to decide how to allocate a $500 project bonus. They could keep the entire amount for themself. Instead, they choose an allocation where they keep $400 and give $100 to a colleague who also worked on the project. The personal financial cost to this individual for making this altruistic choice is $____.
Context-Dependent Nature of Altruism
Impact of Altruism on Strategies in the Pest Control Game