Podcast
Questions and Answers
An action taken by an individual that increases the incentives for other agents to take similar actions is known as a ______.
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.
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.
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 ______.
Examples of positive complementarities include recycling and commuting to ______.
Corruption is an example of a complementarity that is not necessarily ______.
Corruption is an example of a complementarity that is not necessarily ______.
San Vicente remains relatively undiscovered due to underdevelopment as a coordination ______.
San Vicente remains relatively undiscovered due to underdevelopment as a coordination ______.
The Big Push Model addresses coordination ______ in economic development.
The Big Push Model addresses coordination ______ in economic development.
An economy in a 'bad' ______ does not maximize its tourism potential.
An economy in a 'bad' ______ does not maximize its tourism potential.
Economic sustainability is correlated with whether an economy has been growing ______ for some time.
Economic sustainability is correlated with whether an economy has been growing ______ for some time.
A concerted, economy-wide effort to initiate economic development is characteristic of the ______ Model.
A concerted, economy-wide effort to initiate economic development is characteristic of the ______ Model.
To maximize tourism potential, it is crucial to invest in roads, water distribution, and ______ distribution.
To maximize tourism potential, it is crucial to invest in roads, water distribution, and ______ distribution.
One of the limitations of the Big Push Model is that it can be very ______.
One of the limitations of the Big Push Model is that it can be very ______.
Making a coordinated switch to the new ______ is very hard to do.
Making a coordinated switch to the new ______ is very hard to do.
All neighboring countries, with which Sweden shares land borders, drive on the ______.
All neighboring countries, with which Sweden shares land borders, drive on the ______.
Coordination failure leads to a bad ______.
Coordination failure leads to a bad ______.
The volume of cars inside the campus are too high at certain times of the ______.
The volume of cars inside the campus are too high at certain times of the ______.
An Economy is in a 'bad' ______.
An Economy is in a 'bad' ______.
Extreme Traffic Inside the Campus because no one deviates from the current ______.
Extreme Traffic Inside the Campus because no one deviates from the current ______.
Since other people are using private cars, it makes it easier for me to also use a private ______.
Since other people are using private cars, it makes it easier for me to also use a private ______.
Complementarities may lead to coordination ______.
Complementarities may lead to coordination ______.
Flashcards
Coordination Failure
Coordination Failure
A situation where individuals or agents fail to coordinate their actions, leading to an inefficient outcome where everyone is worse off.
Complementarities
Complementarities
Factors that encourage individuals to make similar choices, leading to either positive or negative outcomes depending on the context.
Status Quo Bias
Status Quo Bias
A bias that makes people resistant to change, even if it could lead to a better outcome. It is often caused by complementarities, where individuals are reluctant to move away from the existing system, even if it is not optimal.
Coordination Failure Trap
Coordination Failure Trap
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Big Push Model
Big Push Model
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Doughnut Economic Model
Doughnut Economic Model
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Social Foundation
Social Foundation
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Ecological Ceiling
Ecological Ceiling
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Safe and Just Space for Humanity
Safe and Just Space for Humanity
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Regenerative Economy
Regenerative Economy
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Distributive Economy
Distributive Economy
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Collective Action
Collective Action
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Uncertainty
Uncertainty
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Risk of Perpetuation
Risk of Perpetuation
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High Costs
High Costs
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Individual Choices and Collective Issues
Individual Choices and Collective Issues
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Corruption
Corruption
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Resource Allocation
Resource Allocation
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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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