Economist Jack Hirshleifer Notes That,"Altruism Economizes on the Costs of Policing

question 16

Essay

Economist Jack Hirshleifer notes that,"Altruism economizes on the costs of policing and enforcing contracts." Since economics assumes that people act in a self-interested manner,what could he possibly mean?

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Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional shares.

PE Ratio

Price-to-Earnings Ratio; a valuation measure for a company comparing its current share price to its per-share earnings.

Yield %

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost or value.

Default Risk Premium

The additional yield that investors require to invest in bonds that have a risk of default, compared to risk-free bonds.