After reading this chapter, you should be able to: Describe how information failures may justify government intervention in some markets; explain the difficulties of conveying economic preferences through majority voting; discuss government failure and explain why it happens.
Trang 1Asymmetric Information, Voting, and Public
Choice
Trang 2buyers or sellers
Trang 3Inadequate Buyer Information on
Sellers Inadequate Seller Information on Buyers
Causes underallocation of resources Causes underallocation of
resources
Licensing of surgeons Heavy costs on insurers
Trang 4Adverse selection defined:
to lack of information
the contract is signed
government requiring social insurance
Trang 5workplace safety
Trang 6always necessary
product
information to buyers
Trang 7preferences
to deliver what the voters want
Trang 8government involvement in the economy
imperfect due to:
• Presentation order of the choices
• Distribution of the costs vs benefits
Trang 9Inefficient Voting Outcomes
Trang 10determine size of government
size of government
are closer to theirs
Trang 11government
Trang 12for candidates for election
efficient than private business
Trang 13Global Perspective