Topic 17: Tragedy of the Commons Experiment

Our group was the perfect example of the tragedy of the commons. I guess we didn't really discuss about our strategy before the game, which led to the eventual depletion of the fish. In the first round, everyone took as many as possible because we really wanted to eat the m&ms haha.... I really didn't think much about it because I only wanted to have fun, that's why I picked up a bunch of m&ms. I also kind of forgot about the rule that we need to duplicate however many fish we have left....so yeah..anyway i died out on the second round lol... I sacrificed myself on the second round and let the other two survive. The society obviously didn't reward me...because what else can I do,,, I'm dead. Everyone acts for self-interest. In other groups, they only caught a few fish the first round so they eventually still have a bunch of fish left. This is most likely not going to happen in the real world because everyone wants more for themselves and they won't think for others.... Therefore, our group's sample is actually more realistic...haha. Resources around the world can be depleted if people keep acting on self-interest. For example, coal and oil are all natural resources that can be depleted if we don't use them wisely.

Topic 16: Game Theory and Chicken

People do usually make rational choices. They make choices that are best for them, sometimes not thinking about the results for others. We think about what's best for us and then act according to our thoughts. However, not ALL people make rational choices. Sometimes people may make mistakes or can be affected by a sudden impulse. This sudden impulse or emotional response may lead to a irrational choice because when people are emotional, they do not think as much. The "bad outcome" is usually inevitable because people pursue self-interests. They make rational choices that's best for them, thus leading them to the Nash equilibrium. Everyone uses the same strategy and none thinks what's best for the whole group. Therefore, the "bad results" are inevitable. Only when people think about the group as a whole would they be able to avoid the "bad outcome". However, this rarely happens. To create a better outcome for a group, people have to communicate with each other within the group in order to create the best results. People also need to trust each other in order for the results to work out. Trust is really important because if one person says that he will do this but ends up lying and cheating, it will create bad results too.

Topic 15: What is a Monopoly?

The characteristics of monopoly are barriers to enter the market, sells products that are unique to only that market, and there are no close substitutes to the products of that monopoly. The monopoly market has more to decide on the price and how much to produce because they have no competition. They try to find the best point that maximizes their profit. If they set the price too high, then less consumers will buy (if the product is not a necessity). Therefore, they need to decide on a price that will maximize their profit. The benefit of a monopoly is that they have no competition and all the customers have to buy the products from that specific company. The costs is that monopolies are actually very inefficient and creates deadweight loss. The economists are concerned with the inefficiency of monopolies. I do agree with the the economists' view of efficient monopolies. Monopoly can be a good thing when it comes to advantage in mass production and manufacturing. If a monopoly spends all its surplus to maintain the position, then it is not worth it to attain a monopoly. The resource that could be used for other things are wasted. This creates a huge opportunity cost.