Term
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Definition
| an economy that does not trade with other nations |
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Term
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Definition
| an economy that trades with other countries |
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Term
| Consumption Possibilities |
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Definition
| the combinations of goods and services that a country's citizens might feasibly consume |
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Term
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Definition
| a situation in which a country does not trade with other nations |
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Term
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Definition
| the price at which a good or service is traded on an international market |
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Term
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Definition
| view that free trade is injurious and should be limited |
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Term
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Definition
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Term
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Definition
| legal limit on the quantity of good that can be imported |
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Term
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Definition
| the players, the strategies available to each player and the payoffs each player receives for each possible combination of strategies |
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Term
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Definition
| a table that describes the payoffs in a game for each possible combination of strategies |
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Term
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Definition
| any combination of strategies in which each players strategy is his/her best choice given the other player's strategy |
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Term
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Definition
| a game in which each player has a dominant strategy, and when each plays it, the resulting payoffs are smaller than if each had played a dominated strategy |
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Term
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Definition
| a collation of firms that agree to restrict output for the purpose of earning and economic profit |
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Term
| Repeated Prisoner's Dilemma |
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Definition
| a standard prisoner's dilemma, that confronts the same players repeatedly |
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Term
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Definition
| a strategy for the repeated prisoner's dilemma, in which players cooperate on the first move, them mimic the other partners last move, for each successive move |
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Term
| Decision tree (game tree) |
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Definition
| a diagram that describes the possible moves in a game in sequence and lists the payoffs that correspond to each possible combination of moves |
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Term
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Definition
| a threat to take action that is in the threatener's interest to take out |
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Term
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Definition
| a promise to take an action that is in the promiser's interest to keep |
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Term
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Definition
| a situation in which people cannot achieve their goals because of an inability to make credible threats/promises |
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Term
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Definition
| a way of changing incentives so as to make otherwise empty threats or a promise credible |
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Term
| External Cost (Negative Externality) |
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Definition
| a cost of an activity that falls on people other than those that pursue the activity (pollution) |
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Term
| External Benefit (positive externality) |
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Definition
| a benefit of an activity received by other than those that pursue the activity |
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Term
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Definition
| an external cost/benefit of an activity |
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Term
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Definition
| if at no cost people can negotiate the purchase and a sale of the right to preform activities that cause externalities, they can always arrive at efficient solutions to the problems caused by externalities |
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Term
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Definition
| the tendency for a resource that has no price to be used until its marginal benefits fall to a zero |
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Term
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Definition
| an incentive problem in which too little of a good or service is produced because non payers cannot be excluded from using it |
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Term
| Expected value of a gamble |
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Definition
| the sum of the possible outcomes of the game multiplied by the respected probabilities |
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Term
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Definition
| a gamble which expected value is zero |
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Term
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Definition
| one who's expected value is positive |
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Term
risk neutral person
risk averse person |
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Definition
someone who would accept any gamble that is fair or better
someone who would refuse any fair gamble |
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Term
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Definition
| situations in which buyers and sellers are not equally well informed about the characteristics of goods and services for sale in the marketplace |
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Term
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Definition
| George Akerloff's explanation of how asymmetric information tends to reduce the average quality of goods offered for sale |
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