1. What is Rational Choice, and which perspective of IPE does it support?
Rational choice refers to the decision-making process in which humans perform cost-benefit
analyses and go with the choice that aims to lessen the maximum loss incurred and increase the
minimum gain to be received. This theory supports the liberal perspective of IPE.
2. In what way do both the provision of public goods and prisoners’ dilemma demonstrate
“collective action problems”?
Both the provision of public goods and prisoners’ dilemma demonstrate collective action
problems because both issues often showcase the fact that persons will always act in their
personal interest, which often leads to less-than-optimal results. More specifically, with the
provision of public goods always comes “free riders” which are those that believe that the cost of
their contribution will outweigh their overall benefits, and as such decide not to contribute at all,
which goes against the nature of what a public good should be. Prisoners’ dilemma indicates
another variation of this same issue in that all parties tend to assume that they will be cheated by
the remaining parties because they have chosen to act in their best interest, and so they decide to
do so as well.
3. Who is Adam Smith? What was Adam Smith’s idea of international Trade?
Adam Smith was a Scottish economist (1723-1790) who was considered one of the founding
fathers of Economics. He was behind well-known theories such as the invisible hand and the
classic free market. He believed that both imports and exports should be encouraged, as well as
the trade of the factors of production in an attempt to increase international relations and foreign
exchange.