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Zoë's Feasible Set and Budget Constraint in the Lottery Dilemma
In a diagram illustrating Zoë's choices, the horizontal axis represents the amount she keeps, while the vertical axis shows the amount given to Yvonne, with both axes ranging from £0 to £240. Any allocation is represented by coordinates in the format (amount for Zoë, amount for Yvonne). The boundary of possible choices, known as the feasible frontier or budget constraint, is a straight, downward-sloping line that connects the points (0, 200) and (200, 0). The feasible set includes this frontier line and the entire area enclosed by it and the axes.
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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
Figure 4.11 (reproduced as E4.1) - Zoë's Optimal Altruistic Choice
An individual wins a prize of £200. They must decide how much of this money to keep for themselves (amount 'z') and how much to give to a friend (amount 'y'). The boundary of all possible choices is a straight line connecting the point where they keep everything (z=200, y=0) and the point where they give everything away (z=0, y=200). Considering the entire set of possible allocations (the feasible set), which of the following statements correctly analyzes a possible allocation?
Analyzing an Allocation Decision
An individual wins a prize of £200. They can decide how much to keep for themselves (amount 'z') and how much to give to a friend (amount 'y'). The total amount allocated cannot exceed £200. Match each allocation scenario with its correct description based on the set of all possible choices.
Evaluating an Allocation Choice
An individual has a fixed prize of £200 to divide between two options: keeping the money or giving it to a friend. The set of all possible allocation choices is represented by a feasible frontier (the boundary) and the entire area inside it. True or False: The choice to keep £120 for oneself and give £60 to the friend is a point that lies on the feasible frontier.
An individual receives a prize of £200. They can choose to keep a certain amount, represented by 'z', and give the rest to a friend, represented by 'y'. The equation that represents the boundary of all possible, maximum allocations (the feasible frontier) is y + z = ____.
An individual wins a prize of £200. They must decide how much of this money to keep for themselves (amount 'z') and how much to give to a friend (amount 'y'). The total amount allocated cannot exceed £200. Arrange the following allocation scenarios in order, starting with the one that is possible but does not use the full prize amount, followed by the one that uses the exact full prize amount, and ending with the one that is not possible.
Analyzing Changes to a Feasible Set
Evaluating an Allocation Strategy
An individual has a fixed prize of £200 to divide between keeping it for themselves (amount 'z') and giving it to a friend (amount 'y'). The boundary of all possible choices is defined by the combinations where the total amount allocated is exactly £200. If this individual is currently on this boundary and decides to increase the amount given to their friend by £1, what is the necessary change to the amount they keep for themselves?
Figure 4.10 (Left Panel) - Visualizing Zoë's Altruistic Preferences
Figure 4.10 (Right Panel) - Visualizing Self-Interested Preferences
Preferences Determine Optimal Choice in Zoë's Dilemma