Which of the Following Is an Example of the "Micro-Macro

question 124

Multiple Choice

Which of the following is an example of the "micro-macro dilemma?"

• A) A homeowner purchases a ladder but falls off it because he didn't set up the ladder according to the safety instructions posted on it.
• B) A person gets a speeding ticket because she was talking on her cell phone while driving and didn't notice a speed limit sign.
• C) A person drives without fastening his seat belt even though a warning light and chime remind him to "buckle up."
• D) A person is injured while using a power lawn mower because of a small stone that is hurled from the discharge chute.
• E) A restaurant owner uses plastic containers to keep "take-out" food warm for customers, but the containers cannot be reused or recycled.

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Definitions:

Screening

A solution to the problem of adverse selection that describes the efforts of a less informed party to gather information about the more informed party. A successful screen means that it is unprofitable for bad types to mimic the behavior of good types. Any successful screen can also be used as a signal.

Signaling

A solution to the problem of adverse selection that describes an informed party’s effort to communicate her type, risk, or value to less informed parties by her actions. A successful signal is one that bad types won’t mimic. Any successful signal can also be used as a screen.

Anticipate Adverse Selection

The practice of predicting and mitigating the likelihood of selecting undesirable risks due to information asymmetry.

Secure Neighborhood

An area or community designed or protected in a way that minimizes the risk of crime, providing a safe environment for its residents.