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Questions and Answers
An action taken by an individual that increases the incentives for other agents to take similar actions is known as a ______.
complementarity
A situation where agents cannot coordinate their behavior, leading to a mutually disadvantageous outcome, is referred to as a ______ failure.
coordination
The preference to maintain the current state of affairs, often influenced by complementarities, is termed ______ bias.
status quo
Examples of positive complementarities include recycling and commuting to ______.
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Corruption is an example of a complementarity that is not necessarily ______.
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San Vicente remains relatively undiscovered due to underdevelopment as a coordination ______.
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The Big Push Model addresses coordination ______ in economic development.
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An economy in a 'bad' ______ does not maximize its tourism potential.
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Economic sustainability is correlated with whether an economy has been growing ______ for some time.
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A concerted, economy-wide effort to initiate economic development is characteristic of the ______ Model.
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To maximize tourism potential, it is crucial to invest in roads, water distribution, and ______ distribution.
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One of the limitations of the Big Push Model is that it can be very ______.
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Making a coordinated switch to the new ______ is very hard to do.
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All neighboring countries, with which Sweden shares land borders, drive on the ______.
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Coordination failure leads to a bad ______.
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The volume of cars inside the campus are too high at certain times of the ______.
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An Economy is in a 'bad' ______.
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Extreme Traffic Inside the Campus because no one deviates from the current ______.
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Since other people are using private cars, it makes it easier for me to also use a private ______.
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Complementarities may lead to coordination ______.
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Study Notes
Coordination Problem
- Coordination failure occurs when agents cannot align their choices, resulting in a suboptimal outcome where all are worse off.
- Complementarities increase incentives for similar actions among agents; positive examples include recycling, while negative examples include corruption.
- Status quo bias often arises from complementarities, inhibiting change and leading to persistent underdevelopment.
- A historical example is Sweden's switch to driving on the right in 1967, exemplifying challenges in achieving a coordinated transition.
Applications to Development
- Coordination failure can trap economies in a “bad” equilibrium, where potential improvements remain unrealized due to lack of collective action.
- Local situations, such as traffic in Ateneo, highlight how individual choices (e.g., using private cars) contribute to a collective issue (extreme traffic).
The Big Push Model
- A theoretical framework aimed at addressing coordination problems in economic development through large-scale public policy efforts.
- Effective in initiating broad-based economic growth across various industries and skills.
- Requires substantial investment and can be hindered by lack of clarity on effective allocation of resources and potential for corruption.
Limitations of the Big Push Model
- High costs and the necessity for massive financial commitment can be barriers.
- Uncertainty surrounding optimal investment locations and end-state outcomes poses risks of perpetuating or worsening current conditions.
Doughnut Economic Model
- Introduced by Kate Raworth, this model emphasizes sustainable economic growth within planetary limits.
- The model features two key components: the social foundation (essential needs like healthcare and education) and the ecological ceiling (planetary boundaries to avoid overexploitation).
- The ideal operational space lies between these two rings, termed "the safe and just space for humanity."
- Advocates for a regenerative economy that uses resources sustainably and a distributive economy that focuses on equitable wealth distribution—essential for achieving long-term sustainability.
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Description
This quiz covers key concepts from Economic Sustainability, particularly focusing on the Coordination Problem and Doughnut Economic Model. It aims to highlight the challenges that arise in achieving sustainability within different paradigms of economics. Engage with these important topics to enhance your understanding of sustainable economic practices.
