ECON 104 Lecture Notes - Lecture 6: Deflation, Hyperinflation, Free Rider Problem
25 Feb 2016
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Confess confess: player can"t be better off thus it"s nash equilibrium. Deny deny: improvement as confess-confess to deny deny so equilibrium is inefficient as deny better than confess-confess. Equilibrium: when everyone is doing best of themselves based on given what others do. Tax are a solution to free rider problem aka a way to solve the prisoner"s dilemma in. ^shows dilemma and externalities production of public good. Midterm (on feb 28,2016) up to here only! Commodity money: have intrinsic value: example: gold, some previous stones, cigarettes. Fiat money: no intrinsic value as based on trust to maintain value (give to someone else) Econ 104: valuable as can be used, what we use today. Electric money: no physical form: record on some server, example: cheques, business. Money (economic way): anything with 3 functions: medium of exchange, store of value, unit of account. Example: apples $ and apples : average price is . 50, weight = quantities. Example: apples q=2: apples .
