Welcome to the Q&A for ECN/APEC 2010, where you can ask questions and receive answers from your fellow students, the TA, and your professor.

Please only ask questions about the material for the course.

For questions and discussions about course organization or other course related topics, come see us after class or during office hours.

Feel free to discuss quiz questions on the Q&A, but do not provide direct answers to quiz questions before the quiz's due date.

You have been assigned an automatic user name which you won't be able to change.

Welcome to the Q&A for ECN/APEC 2010, where you can ask questions and receive answers from your fellow students, the TA, and your professor.

Please only ask questions about the material for the course. Try to create discussions about the material we see in class, instead of just thinking of economics in general (this is an introduction to microeconomics class, not a policy or government class).

For questions and discussions about course organization or other course related topics, come see us after class or during office hours.

Feel free to discuss quiz questions on the Q&A, but do not provide direct answers to quiz questions before the quiz's due date.

Quiz 15, Question 13 how do you even begin to solve this?

0 votes
9 views

Suppose that 100 million Americans are each given $100 and needs to decide whether to:

  1. Buy a pair of jeans, or
  2. Contribute $100 to a system protecting earth from collisions with asteroids.

(These are the only two options as far as spending these $100.)

The probability that an asteroid is deflected is equal to the proportion of these 100 million Americans who decide to give $100 toward asteroid protection.

Suppose that each of the 100 million Americans attaches a value of $1 to an increase of 1% in the chance of asteroid deflection.

Also suppose that each each of the 100 million Americans attaches a value of $100 to the pair of jeans they could buy instead of giving to asteroid protection.

asked Apr 29 by canvas-9dad53739df91 (261 points)

1 Answer

0 votes
I would think buying a pair of jeans is the dominant strategy because that is guaranteed. The people value the jeans more at $100 versus $1. The likelihood of an asteroid hitting the earth is small, and so it's more beneficial to invest in the jeans. They think about what is best for them and assume others will give to the asteroid protection.
answered Apr 30 by canvas-e25408d8f8d15 (216 points)
...