The efficient society - continued on chapter 2. Social contract allows people to cooperate for their selfish behaviours. Individual over community - do whatever they want. Efficiency turns out to maximum reference community - everyone is happy so they stop trading b/c you can"t make people happier than they already are. **on the test, label the full name for each outcome for prisoner"s dilemma, not just the ranking of it. 8 years (pareto inefficiency) 0 years (i am the free-rider) Me not cooperate 10 years (i am the sucker) Every prisoner"s dilemma is backed up by force. One shot - if it was a onetime thing under the situation of prisoner"s dilemma, there is a strong reason to be a free-rider. Multiple iteration - situations like roommates/friends - we have to use enforcement to cooperate under social contract. But if you were a free-rider at all-time then you would end up getting the 3rd outcome (pareto inefficiency).