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A Stand-Up Paddleboard Outfitter Operates Without Insurance

question 60

Essay

A stand-up paddleboard outfitter operates without insurance. The outfitter's marginal cost of safety (e.g., staff training, rescue equipment) is MCA = 100 + 14A. The marginal benefit of those actions is given by MBB = 200 - 6A, where A is the number of safety actions taken. What is the optimal number of precautions for this outfitter to take?


Definitions:

Free Ride

A situation where one benefits from others' efforts without contributing to the cost or effort involved.

Deindividuation

A psychological state where an individual loses self-awareness and feels less responsible for their actions, often occurring within group settings.

Self-Awareness

Perception of one’s self-identity, emotional experiences, incentives, and goals.

Irresponsible Behavior

Actions that show a lack of consideration for the consequences of one's actions, especially in regard to others' welfare and rights.

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