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1RESPONSESTOTHEDISCUSSIONQUESTIONSOFCHAPTER1:Thisquestionhighlightsthesignificantbutwidely-overlookedfactthatagreatdealofimportantcooperationoccursamongpeoplewhoknowabsolutelynothingaboutoneanother.Amarriedcoupleplanningavacationtogethertypicallycooperatesbyusingextensiveanddetailedknowledgeofeachother'spreferences,habits,allergies,andsoon.Butthepeoplewhocooperatedtomakeorangejuice,cereal,milk,andcoffeeavailabletoBoettkethismorningdidn'tevenknowthatBoettkeexistsor,forthemostpart,abouttheexistenceoftheotherswhosecooperationhelpedtoproducehisbreakfast.Economictheoryisespeciallyusefulinexplaininghowcooperationoccursincasesofthelattersort,andalsowhycooperationsometimesfailstooccur.Driverswouldhavelittletroubledecidingtheywereonurgentmissions,andtheurgentlanewouldprobablybejustascrowdedasalltheothers.Eveninaworldofunselfishdrivers,itwouldbeimpossiblefordriverstoassesstherelativeurgencyoftheirownandotherdrivers'missions.Moreover,themoreinconsideratedriverswouldbemostreadytousetheurgentlanes,sothatsuchasystemwouldendupprovidingatimesubsidytotheprojectsofmoreselfishdriversthroughatimetaxontheprojectsofmoreconsideratedrivers.SinceMotherTeresawasinterestedinbuildingaleprosarium,sheclearlyfurtheredherowninterestindoingso.Butitwouldbeoddtocallthisselfishbehavior.Actinginone'sowninterestisselfishonlyifone'sinterestsareselfish.Contrarytowhatmanyeconomistscarelesslyassert,economictheorydoesnotassumethateveryonebehavesselfishly.Perhapseconomistsevenmisleadpeoplewhentheysaythatpeopleactintheirowninterest.Itmightbebettertosaythatpeopleacttopromotetheprojectsinwhichtheyareinterested.Thatavoidsthemisleadingsuggestionthateconomictheorypostulatesselfishorgreedybehavior.Itdoesnotdoso.DidMotherTeresaeconomize?Sure.Shedecidedhowtobestuseher$190,000award.ShecouldhavedonateditalltotheJerryLewisTelethon,investeditinYahoo!stock,ordonateditforthepurchaseofnewbooksattheCalcuttaLibrary.Sheinsteadusedtheawardtopromotewhatshebelievedwasthemosturgentprojectdemandingherattention.Becausethatawardcouldhavebeenusedforothervaluableprojects,sheeconomized.Sheselectedthemostvaluableuse–inherview--forthatmoney.Theauthorofthatnewspaperitemwasprobablytryingtodistinguishbetweenmotherswhoseprimarygoalisadditionalincomewhentheychoosetowork,andmotherswhoseprimarygoalissomethingelse,suchasthesatisfactionofafulfillingcareer,oranopportunitytoescapetheinsistentdemandsoftheirchildren.Butbothkindsofmotherschoosetowork,althoughsomechoosejoyfullyandothersnodoubtchoosewithsadnessandregret.Wecouldinterprettheseresultsasevidencethatpeopleareashamedtoadmitaninterestinfinancialrewards.Alternatively,theresultsmayindicatethatpeoplearelesscharitableinjudgingotherpeople'sbehaviorthaninjudgingtheirown.Peoplerecognizethecomplexityoftheirownmotivationsmorereadilythantheyconcedethecomplexityofotherpeople'smotivations.Butevenifthefinancialrewardsarenotaprimefactorinmostpeople'sdecisiontoattendlawschool,theysurelyplaysomeroleinalmosteveryone'schoice.Changesintheincomeprospectsoflawyerswillthereforeaffectthenumberofpeoplechoosingtoenterlawschool.2AdamSmitharguedinTheTheoryofMoralSentiments(alsowritteninthe1700s)thatpeoplewanttoincreasetheirmoneyincomesprimarilyinordertoenhancetheirstatus.ButColinCampbell,aBritishsociologist,recentlyarguedthatanotherfactorisimportant.Hearguesthattheinsatiabledesireforadditionalconsumergoodshasitsrootsinthepracticeofdaydreaming,andthatitexpressesadesiretoexperienceinrealitysomethingthathaspreviouslybeenenjoyedinimagination.Ifthistheorystrikesyouasfar-fetched,readCampbell'scogentessayonConsumingGoodsandtheGoodofConsuminginCriticalReview,Vol.8,No.4(Fall,1994).Peoplewillstartplanningtoarrivelater(becausethemeetingsneverstartontime),whichwillinducenonpunctualpeopletoarrivestilllater,andsoonuntiltardinessbecomesgeneral.Theactualstartingtimeformeetingswillbecomeincreasinglydifficulttopredict.Manyruleshavedevelopedtodefinetherightsandresponsibilitiesofuniversityemployees—president,deans,professors,registrar,custodians,departmentheads,andmanyothers.Thehumanandphysicalresourcesofuniversitiesareorganizedeachterminacomplexdancethatproducesmoreorderthanchaosbecauseuniversityemployeesareforthemostpartdiligentlyexercisingtheirpropertyrights(andobligations!)andfulfillingtheirresponsibilitiesinfaithfuladherencetotherulesofthegame.Hundredsofstudentsmanagetoslipintoclassroomseatswithoutconflictorconfusionbyfollowingthesimplerule,Seatsbelongforthishourtothosewhofirstoccupythem.Beaviscanflunkbothcoursesifhewasteshisstudyingtime.Forexample,hegoestothelibrarywithhistextbooksandassignments,butspendsthreehoursplayingGameboy.HowcanheearnatleastaCinbothcourses?Hecanincreasehisoverallstudytimefromthreetosixhoursperweek(andnotwastehistime,ofcourse)and/orattendastudyskillsworkshopinordertoincreasehisproductivity.Thisisanissueofmakingtradeoffssubjecttoaresourceconstraint,andbreakingthroughtheresourceconstraint.WewillgointomoredetailinChapter2,usingthenotionofaProductionPossibilitiesFrontier.Wemeanthatweseenocausalconnectionbetweenobservedevents.Forexample,manypeoplebelievethatg