To discourage people from breaking laws against speeding, society can increase the probability that someone exceeding the speed limit will be caught and punished, or it can increase the size of the fine for speeding. Explain why either method can be used to discourage speeding. Which approach is a government likely to prefer, and why?
Answer to relevant QuestionsRyan offers to bet Kristin that if a six- sided die comes up with one or two dots showing, he will pay her $ 3, but if it comes up with any other number of dots, she’ll owe him $ 2. Is that a fair bet for Kristin? Hugo has a concave utility function of U(W) = W0.5. His only asset is shares in an Internet start-up company. Tomorrow he will learn the stock’s value. He believes that it is worth $ 144 with probability 2/3 and $ 225 with ...After Hurricane Katrina in 2005, the government offered subsidies to people whose houses were destroyed. How does the expectation that subsidies will be offered again for future major disasters affect the probability that ...Evan is risk seeking with respect to gains and risk averse with respect to losses. Louisa is risk seeking with respect to losses and risk averse with respect to gains. Illustrate both utility functions. Which person’s ...Suppose that everyone in the used car example in the text is risk neutral, potential car buyers value lemons at $ 4,000 and good used cars at $ 8,000, the reservation price of lemon owners is $ 3,000, and the reservation ...
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