ECN 340 Lecture Notes - Lecture 5: Demand Curve, Monopoly
23 May 2018
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Lecture 5: Exploitation of Affection
Exploitation of Affection
• In a loving relationship, one person is concerned about the welfare of the other
• Each person in the relationship is both a donor of charitable expression (gifts) and a
recipient
• Each person realizes there is an unwritten social contract between the two: try to make
the other person happy
Exploitation of Affection
• Strength of most personal relation is based on affection of one person for the other
• Relationship works for 2 reasons:
o Each is concerned about the welfare of the other, therefore relationship is
charitable
o Both understand the limits of their own behaviour and the behaviour of the
other person (the boundaries allowed) – there are boundaries, we establish the
boundaries with the people that we care about
• Recall individuals have different tastes and preferences
o A lot to do with exploitation
o In a loving relationship, two individuals have two different intentions
• The proposition underlying the charitable exploitation argument is that the donor of the
gifts receives utility from giving to the recipient
o We are never happy, you always want more and more utility
• We assume that in a loving relationship, one person is concerned about the welfare of
the other
• Each person in the relationship is both a donor of charitable expression (gifts) and a
recipient
• Each person realizes there is an unwritten social contract between the two: try to make
the other person happy
The Affection Model
• Donor of a gift receives pleasure from giving to the recipient - the less expensive the gift
the more often he/she will give – recall the downward sloping demand curve
o Giving at a lower cost. Give more for less cost
• Gifts can be in the form of money, a box of candy, simply listening to the other person
or providing a sexual experience
• Gifts are given until MC = MB
• The rational donor will give gifts until Marginal Benefits equal the Marginal Cost.
Meaning? Is there a dynamic relationship between MC and MB? It is dynamic.
o Giving gifts until MC = MB, and give them inexpensive gifts to make them happy
• But in a loving relationship there is a possibility of exploitation because of the love felt
for the other person may be of different levels of intensity! Meaning?
find more resources at oneclass.com
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Document Summary
The affection model: donor of a gift receives pleasure from giving to the recipient - the less expensive the gift the more often he/she will give recall the downward sloping demand curve, giving at a lower cost. Meaning: when we are in love, it is like a greed and we have to give it an index (no monetary value). Giving expensive gifts: there is an issue of how much love there is, someone can be completely in love, we would love that. However, two people are not in love in the same amount. In the end it is a war, she either wants it or nothing at all. And deny you the pleasure of her smile, which will cost you more and need to get a new job. In situations where both are in level 10, you will get them whatever makes that person happy.
