Class Notes (811,155)
Canada (494,530)
Economics (1,279)
ECN 340 (200)

Chapter 8

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Ryerson University
ECN 340
Thomas Barbiero

ECN340 Week 4Chapter 8Exploitation of Affection y In a loving relationship one person is concerned about the welfare of the other y Do you love me Means Do you want the best for me In economic termsy Each person in the relationship is both a donor of charitable expression gifts and a recipienty Each person realizes there is an unwritten social contract between the two try to make the other person happy The Affection Model y Donor of a gift receives pleasure from giving to the recipient the less expensive the gift the more often heshe will give Downward sloping demand curvey Gifts can be in the form of money a box of candy simply listening to the other person or providing a sexual experiencey Gifts are given until MC Marginal costMB Marginal benefit y But there is a possibility of exploitation Exploitation Cont y The recipient can subtly say give me this amount or I will take nothing deny you the pleasure of seeing me happyy If the recipient asks too much the donor may be better off giving nothingy The abilit
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