Chapter 22/Frontiers in Microeconomics ❖ 61
141. Economic policy that appears to be ideal in an economics textbook may not be the final policy that
is approved by elected politicians because
a.
sometimes a politician’s self interest may conflict with the national interest.
b.
economics professors have a notoriously low voting rate.
c.
only policies advocated by the President’s Council of Economic Advisors receive enough
national attention to interest politicians.
d.
Economists cannot explain why politicians do not implement the ideas from their
textbooks.
142. Economic theory assumes that voters, politicians, and other political participants are largely moti-
vated by
a.
personal self-interest.
b.
altruism.
c.
a desire to promote the general welfare.
d.
a desire to promote allocative economic efficiency.
62 ❖ Chapter 22/Frontiers in Microeconomics
Table 22-16
Citizens in a small town are deciding how best to develop a plot of land at the center of town. They
have narrowed the options to: a park, town hall, gas station, restaurant. The voters’ preferences are
shown in the table below.
Voter
First Choice
Second Choice
Third Choice
Fourth Choice
1
park
restaurant
gas station
town hall
2
town hall
restaurant
gas station
park
3
park
restaurant
gas station
town hall
4
gas station
town hall
restaurant
park
5
town hall
restaurant
gas station
park
6
restaurant
gas station
park
town hall
7
park
restaurant
gas station
town hall
8
town hall
restaurant
gas station
park
9
restaurant
gas station
park
town hall
10
park
restaurant
gas station
town hall
11
park
restaurant
gas station
town hall
12
gas station
restaurant
town hall
park
13
town hall
restaurant
gas station
park
14
gas station
town hall
restaurant
park
143. Refer to Table 22-16. If the election is conducted by instant runoff, the first votes to be reassigned
will be the first choice votes for
a.
restaurant, which will be reassigned as votes for gas station.
b.
restaurant, which will be reassigned as votes for park.
c.
gas station, which will be reassigned as votes for town hall.
d.
gas station, which will be reassigned as two votes for town hall and one vote for
restaurant.
144. Refer to Table 22-16. If the election is conducted by instant runoff, the final two options will be
a.
park and restaurant.
b.
restaurant and town hall.
c.
town hall and gas station.
d.
gas station and park.
145. Refer to Table 22-16. If the election is conducted by instant runoff, the election winner will be
a.
park.
b.
restaurant.
c.
town hall.
d.
gas station.
Chapter 22/Frontiers in Microeconomics ❖ 63
BEHAVIORAL ECONOMICS
1. Economists use basic psychological insights in the field of study called
a.
psychological economics.
b.
transitional economics.
c.
behavioral economics.
d.
social economics.
2. Most economic models
a.
incorporate the assumption of rational behavior on the part of economic actors.
b.
incorporate the notion that people are usually reluctant to change their minds.
c.
are meant to precisely duplicate reality.
d.
assume that people often make sub-optimal choices.
3. Behavioral economics
a.
integrates psychological insights into economic models.
b.
relies on the assumption that homo economicus describes economic decision-making.
c.
assumes that economic agents have full information about the conditions surrounding their
decisions.
d.
All of the above are correct.
4. When economists assume that people are rational, they assume that
a.
consumers maximize profits.
b.
firms maximize revenues.
c.
consumers maximize utility.
d.
firms maximize output.
5. Conventional economic theory assumes that people
a.
care a great deal about fairness.
b.
are inconsistent over time in their decisionmaking.
c.
are rational.
d.
are satisficers.
64 ❖ Chapter 22/Frontiers in Microeconomics
6. Herbert Simon suggested that people are not rational maximizers but satisficers, meaning that they
choose a course of action that is
a.
personally satisfying, with a greater emphasis on personal consumption than on fairness.
b.
socially satisfying, with a greater emphasis on fairness than on personal consumption.
c.
good enough.
d.
risk averse.
7. A “satisficer” is a person who
a.
always chooses the best course of action.
b.
often chooses the worst course of action.
c.
makes decisions that are merely good enough.
d.
studies both economics and psychology.
8. A person who makes decisions that are “merely good enough” is called a(n)
a.
optimizer.
b.
rational person.
c.
satisficer.
d.
maxi-minimizer.
9. The suggestion that people are “satisficers” is similar to the view that people
a.
are wealth-maximizers.
b.
exhibit “bounded rationality.”
c.
go to a lot of trouble to weigh costs and benefits before choosing a course of action.
d.
change their minds often.
10. Herbert Simon, one of the first social scientists to combine the study of economics and psychology,
suggested that humans should be viewed as
a.
rational maximizers.
b.
satisficers.
c.
independent thinkers.
d.
signalers.
Chapter 22/Frontiers in Microeconomics ❖ 65
11. Juanita is preparing to study for her economics final exam. She tells her friend that she will be
happy if she just gets a B, even though she could likely earn an A if she studied harder. Juanita is
what Herbert Simon would call a
a.
rational maximizer.
b.
satisficer.
c.
homo economicus.
d.
screener.
12. Which of the following is an example of satisficing behavior?
a.
You continue studying for your economics exam until you believe you’ll get a perfect
score.
b.
You spend time looking over the lettuce at the grocery store in order to make sure you get
the best head of lettuce.
c.
You briefly clean your room because that’s all it takes to get it “clean enough.”
d.
You carefully plan your day in order to get “the most out of life.”
13. Which of the following students exhibits satisficing behavior?
a.
Mick studies his economics notes every night so that he can be sure to earn a perfect score
on his exam.
b.
Bill studies his economics notes for a few hours the night before the test because he will
be satisfied with a C on his exam.
c.
Marguerite studies extensively as she will only be satisfied with a very high score.
d.
None of these students exhibits satisficing behavior.
14. Studies of human decision-making show that
a.
firms are less likely to maximize profits than consumers are to maximize utility.
b.
firms are more likely to maximize profits than consumers are to maximize utility.
c.
people are irrational more often than they are rational.
d.
people are reluctant to change their minds.
15. Based on the studies of human decision making, which of the following statements is correct?
a.
Most people are not bothered by perceived unfairness as long as they receive some
compensation, even if the amount is very small.
b.
Most people are very willing to change their minds.
c.
Many people’s preferences are inconsistent over time.
d.
All of the above are correct.
66 ❖ Chapter 22/Frontiers in Microeconomics
16. Studies of human decision-making have detected systematic mistakes that people make. Which of
the following have been detected?
a.
people are overconfident
b.
people give too much weight to a small number of vivid observations
c.
people are reluctant to change their minds
d.
All of the above are correct.
17. Some of the systematic mistakes that people make include
a.
being overconfident.
b.
placing too much weight on events that are more vivid compared to those with greater
statistical probability.
c.
being generally unwilling to change their minds.
d.
All of the above are correct.
18. Studies of human decision making reveal several systematic mistakes people make. Which of the
following is not an example of one of these mistakes?
a.
Pedro bets Michelle that he can name all 50 states in the US, but when he tries he can only
name 46.
b.
Kate hears a news report about 5 people dying from a tornado in Kansas and decides to
cancel her plans to visit her aunt there.
c.
Randi is a strong proponent of raising the minimum wage. She reads a research report on
the effects of increasing the minimum wage and becomes even more sure of her position.
d.
Jenny is shopping for a new car and has found that Hondota cars consistently get high
quality ratings. Her friend had trouble with her Hondota but Jenny still decides to
purchase a Hondota.
19. Economic theory assumes people are always rational. Yet observation indicates that people do not
always behave rationally. Which of the following is not a systematic mistake people make in their
decisionmaking?
a.
People often interpret information to fit beliefs already held.
b.
People place too much emphasis in their decisionmaking on a few extreme situations of
which they are aware.
c.
People tend to view current prices differently than they view future prices.
d.
People are too sure of their own abilities.
20. Riley travels a great deal, and over the past several years he has read dozens of reviews of hotel
chains, all of which rave about the clean rooms and great service at Comeon Inns. Last month, Riley
Chapter 22/Frontiers in Microeconomics ❖ 67
checked into a room at a Comeon Inn for the first time, only to find the room filthy and the service
lousy. He decided the Comeon Inn chain is inferior to other hotel chains.
a.
Riley was irrational to have believed the reviews that he had read.
b.
Riley was rational to have changed his mind about Comeon Inns based on his one
experience.
c.
Riley is an example of someone who gives too much weight to a small number of vivid
observations.
d.
Riley is an example of someone who is reluctant to change his mind.
21. Your city newspaper publishes a “Best of” poll that lists its readers’ favorite restaurants. Mundo
Bar and Grill is ranked as the best casual restaurant. Your best friend had dinner at Mundo Bar and
Grill last week and commented that the food was mediocre and the service was slow. You decide
not to have dinner at Mundo Bar and Grill based on your friend’s experience. Your decision illus-
trates that people
a.
are reluctant to change their minds.
b.
are overconfident.
c.
give too much weight to a small number of vivid observations.
d.
are satisficers.
22. A survey of 1,500 frequent restaurant patrons revealed that, Chang Cheng, a local Chinese restau-
rant, offers high-quality food at low prices. Based on one dining experience, a restaurant critic gave
Chang Cheng a poor review, saying the food was not very good. As a result, you decide not to dine
at Chang Cheng. This decision is an example of which of the following systematic mistakes that
people make when making decisions?
a.
People are overconfident.
b.
People give too much weight to a small number of vivid observations.
c.
People are reluctant to change their minds.
d.
All of the above are correct.
23. Evidence from studies of workers’ choices on whether to participate in 401(k) plans suggests that the
workers’ behavior appears to exhibit
a.
indifference.
b.
ignorance.
c.
inertia.
d.
indecision.
68 ❖ Chapter 22/Frontiers in Microeconomics
24. People interpret evidence to confirm beliefs they already hold. This statement is an example of
which of the following systematic mistakes that people make?
a.
people are overconfident
b.
people give too much weight to a small number of vivid observations
c.
people are reluctant to change their minds
d.
All of the above are correct.
25. Domingo is a contestant on a trivia quiz show. For every state capital he can correctly identify, he
will win $1,000. However, before identifying any capitals, he must decide how many he thinks he
can correctly identify. If he cannot identify as many as he has wagered, Domingo will not win any
money. Suppose Domingo says that he can correctly identify 42 state capitals for a potential payoff
of $42,000. According to studies of human decision-making, what is most likely to happen?
a.
Domingo will be able to identify 42 state capitals and he will win $42,000.
b.
Domingo will be able to identify fewer than 42 state capitals and will not win any money.
c.
Domingo will not be able to identify any state capitals and will not win any money.
d.
Domingo will choose to save all of the money he wins on the quiz show for his retirement.
26. Suppose a group of people read an article on capital punishment. Prior to reading the article, 60% of
the members of the group were opposed to capital punishment, while 40% of the members of the
group were in favor of capital punishment. According to studies of human decision-making, which
of the following is likely?
a.
After reading the article, all members of the group oppose capital punishment.
b.
After reading the article, all members of the group are in favor of capital punishment.
c.
After reading the article, 60% of the members of the group are opposed and 40% of the
members of the group are in favor of capital punishment.
d.
The members of the group would elect a representative in favor of capital punishment.
27. Students of microeconomic principles often say they are going to study “tonight,” because the only
way to pass the exam is to study some every night. When “tonight” comes, some students choose to
do something else. Come exam day, these students do not do well on their exam. This observation is
an example of how people
a.
are inconsistent over time.
b.
are consistent over time.
c.
are mainly interested in fairness.
d.
are rational.
Chapter 22/Frontiers in Microeconomics ❖ 69
28. Conventional economic theory suggests that in the ultimatum game, the player proposing a split of
$50 will propose that she get $49 and that the other player get $1. By the same reasoning, if the
amount to be split is $1000, the player proposing the split will propose that she gets
a.
$500 and that the other player gets $500.
b.
$998 and that the other player gets $2.
c.
$999 and that the other player gets $1.
d.
$1000 and that the other player gets nothing.
29. The results of the ultimatum game illustrate the fact that
a.
people’s behavior is often driven by an innate sense of fairness.
b.
homo economicus is a good description of people’s behavior.
c.
self-interest brings out the most efficient economic outcome.
d.
Both b and c are correct.
30. Experiments show that when real people play the ultimatum game, starting with $100,
a.
Player A usually proposes giving Player B more than $50.
b.
Player B usually accepts Player A’s proposal if Player A proposes giving Player B $30 or
$40.
c.
players show themselves to be rational wealth-maximizers.
d.
Both B and C are correct.
31. Evidence points to the fact that, in the real world, people appear to care about fairness
a.
only when it coincides with their own self-interest.
b.
only when it coincides with their determination to be consistent over time.
c.
even when it does not coincide with their own self-interest.
d.
not at all.
32. Evidence from experiments in which real people play the ultimatum game supports the idea that
people
a.
are rational wealth-maximizers.
b.
tend to be driven by fairness, without regard for their own self-interest.
c.
are driven by both fairness and self-interest.
d.
have trouble calculating their own levels of wealth.
33. Suppose that an economics professor selects two students, Byron and Regina, to participate in a
classroom experiment. The professor gives Byron ten $1 bills. Byron must pick an allocation of the
ten $1 bills to offer to Regina. If Regina accepts the allocation, each student keeps his or her portion
70 ❖ Chapter 22/Frontiers in Microeconomics
of the money. If Regina rejects the allocation, the professor keeps the $10, and each student re-
ceives nothing. Byron selects $9 for himself and $1 for Regina. Based on the studies of human de-
cision making, which of the following statements is correct?
a.
If Regina accepts the offer, she is behaving rationally.
b.
If Regina rejects the offer, she may value fairness more than $1.
c.
If Regina rejects the offer, Byron made a bad choice by trying to keep $9 for himself.
d.
Any of the above could be correct.
34. Anthony and Addie are playing the ultimatum game, starting with $100. The coin flip results in An-
thony being the one to propose a division of the $100. Anthony proposes that he gets $99 and Addie
gets $1. Which of the following statements is correct?
a.
Because the 99-1 split isn’t fair, Anthony should not make this offer.
b.
Conventional economic theory predicts that Anthony will propose a 99-1 split, just as he
did.
c.
Experimental evidence suggests that Addie will accept the 99-1 split because, even though
it isn’t fair, it’s better than nothing.
d.
Economic theory predicts that Anthony should choose a 60-40 split to maximize his
payoff.
35. Eli and Peyton are playing the ultimatum game, starting with $100. The coin flip results in Eli being
the one to propose a division of the $100. If Eli acts as economic theory assumes, he should propose
that
a.
he gets $30 and Peyton gets $70.
b.
he gets $50 and Peyton gets $50.
c.
he gets $60 and Peyton gets $40.
d.
he gets $99 and Peyton gets $1.
36. Eli and Peyton are playing the ultimatum game, starting with $100. The coin flip results in Eli being
the one to propose a division of the $100. If Eli acts as experimental evidence shows, he will likely
propose that
a.
he gets $30 and Peyton gets $70.
b.
he gets $50 and Peyton gets $50.
c.
he gets $70 and Peyton gets $30.
d.
he gets $99 and Peyton gets $1.
Chapter 22/Frontiers in Microeconomics ❖ 71
37. The ultimatum game reveals that
a.
it does not make sense to try to maximize profits.
b.
people may have an innate sense of fairness that economic theory does not capture.
c.
offering someone a wildly unfair outcome is usually ok since people tend to make
decisions using a “something is better than nothing” philosophy.
d.
Both a and b.
38. If you are assigned the role of Player A in the Ultimatum game and you propose that player B gets
$1 and you get $99
a.
you are behaving as a rational wealth-maximizer and player B is likely to accept your
offer.
b.
you are behaving as a rational wealth-maximizer and player B is likely to reject your offer.
c.
you are not behaving as a rational wealth-maximizer and player B is likely to accept your
offer.
d.
you are not behaving as a rational wealth-maximizer and player B is likely to reject your
offer.
39. In a dictator game, player A must divide $100 between player A and player B. In this game, player
B does not have the opportunity to reject an offer — he or she goes home with whatever player A
offers. Experiments have observed that when player A splits the $100, he or she consistently offers
over $10 to player B. Which of the following comments fits best.
a.
Although player A is acting as economic theory usually assumes, he or she makes such
offers because they seem more fair.
b.
Although player A is acting as economic theory usually assumes, he or she makes such
offers although they are not fair.
c.
Although player A is not acting as economic theory usually assumes, he or she makes such
offers because they seem more fair.
d.
Although player A is not acting as economic theory usually assumes, he or she makes such
offers because they are not fair.
40. Margaret knows that she needs to save 20% of her annual income for retirement. However, she
spends 90% of her income each year. This is an indication that Margaret’s preferences are
a.
irrational.
b.
inconsistent over time.
c.
satisficing rather than maximizing.
d.
undefined.
41. A mother gives her teenage daughter two choices: spend 20 minutes cleaning her room today or
spend 25 minutes cleaning her room tomorrow. The same mother gives her same daughter two
72 ❖ Chapter 22/Frontiers in Microeconomics
additional choices: clean out the garage for 20 minutes next Tuesday or 25 minutes next Wednes-
day. According to economic theory,
a.
if the daughter chooses to procrastinate, she is behaving irrationally.
b.
the daughter will likely choose to clean out her room tomorrow but clean out the garage
next Tuesday.
c.
the daughter will likely choose to clean out her room tomorrow and clean out the garage
next Wednesday.
d.
if the daughter chooses to procrastinate, she is exhibiting satisficing behavior.
42. According to one survey 76 percent of Americans said they were not saving enough for retirement.
This example of inconsistency over time
a.
is rational behavior.
b.
likely occurs because saving requires a sacrifice in the present for a reward in the distant
future.
c.
likely occurs because Americans don’t care about retirement.
d.
definitely would not happen if Americans earned a greater return on their investments.
43. Advocates of a tax on soda and other sugary drinks argue that such a tax
a.
may encourage better nutrition.
b.
will protect our future selves from the long run negative effects of consuming these drinks.
c.
is needed because people tend to behave inconsistently over time.
d.
All of the above are correct.
44. Mankiw argues that a primary difference between taxing products like gasoline and taxing soda and
other sugary drinks is that
a.
consumption of gasoline causes negative externalities on society while consumption of
soda affects the consumer.
b.
the government can generate significant revenue from the gas tax but not from a soda tax.
c.
gasoline has inelastic demand but soda has elastic demand.
d.
Both a and c are correct.
45. Which of the following statements is correct?
a.
Based on studies of human decision making, most people are overconfident in their own
abilities.
b.
Arrow’s impossibility theorem disproves the median voter theorem.
c.
Romantic gifts are an example of adverse selection.
d.
An efficiency wage encourages workers to shirk.
Chapter 22/Frontiers in Microeconomics ❖ 73
MSC: Analytical
46. Which of the following statements is not correct?
a.
Based on studies of human decision making, most people value fairness.
b.
Based on studies of human decision making, some people’s preference are inconsistent
over time.
c.
Government intervention is the best remedy for the problems caused by asymmetric
information.
d.
Advertising can be an example of a company signaling the quality of its products.
47. Which of the following statements is not correct?
a.
The median voter theorem explains why politicians appeal to the middle of the voting
distribution.
b.
Based on studies of human decision making, most people prefer to procrastinate, both in
the immediate future and in the distant future.
c.
Screening refers to an uninformed party trying to extract information from an informed
party.
d.
Advertising can be an example of a company signaling the quality of its products.
TRUE/FALSE
1. The science of economics is a finished jewel, perfect and unchanging.
2. In economics, a difference in access to relevant knowledge is called a behavioral asymmetry.
3. Informational asymmetry may apply to a hidden action or hidden characteristic where the informed
party may be reluctant to reveal relevant information.
4. An example of asymmetric information is when a seller of a house knows more than the buyer about
the house’s condition.
74 ❖ Chapter 22/Frontiers in Microeconomics
5. Economists have found that asymmetric information is not very prevalent.
6. An example of an information asymmetry is when a worker knows more than his employer about his
work effort.
7. The criminal actions of the top managers of corporations such as Enron, Tyco, WorldCom, and
Adelphia are an example of moral hazard.
8. The problem of moral hazard is a problem of hidden action.
9. The problem that arises when one person performs a task on behalf of another person is called the
lemons problem.
10. One of the things that employers can do to lessen the moral hazard problem involving their employ-
ees is to pay them in advance for their work.
11. In the employer-worker relationship, the employer is regarded as the “principal” and the worker is
regarded as the “agent.”
12. In a moral hazard problem, the agent is unable to perfectly monitor the principal’s behavior so the
principal applies less effort than the agent considers desirable.
13. One way that employers respond to the moral-hazard problem is by monitoring their employees.
Chapter 22/Frontiers in Microeconomics ❖ 75
14. The moral hazard problem and the desire of firms to lessen that problem serve as a plausible expla-
nation for a firm paying above-equilibrium wages to its workers.
15. The classic example of adverse selection is the market for used cars.
16. The two major problems caused by asymmetric information are the moral-hazard problem and the
principal-agent problem.
17. Moral hazard and adverse selection are similar asymmetric information problems but moral hazard
involves hidden actions while adverse selection involves hidden characteristics.
18. Signaling is an action taken by an uninformed party to induce an informed party to reveal infor-
mation.
19. An example of signaling is a boyfriend giving an expensive, romantic gift to his girlfriend to convey
his love for her.
20. Screening is an action taken by an uninformed party to induce an informed party to reveal infor-
mation.
21. An example of screening is a company spending a large sum on advertising to convey the high qual-
ity of its product.
22. The field of behavioral economics applies the methods of economics to study how government
works.
76 ❖ Chapter 22/Frontiers in Microeconomics
23. Valerie prefers A to B and she prefers B to C. If Valerie’s preferences are transitive, then she prefers
A to C.
24. If A is preferred to B and C is preferred to D, then B must be preferred to C to satisfy transitivity.
25. The Condorcet voting paradox shows that outcomes based on dictatorial preferences do not always
obey the property of transitivity.
26. The Condorcet paradox implies that the order in which items are voted on under majority rule is un-
important.
27. Condorcet explained his paradox in a 1951 book called Social Choice and Individual Values.
28. The Condorcet paradox demonstrates that the order in which people vote on choices may influence
the final outcome.
29. The Condorcet paradox shows that there is no scheme for aggregating individual preferences into a
valid set of social preferences.
30. The Condorcet paradox tells us that, even though it is impossible to satisfy all of Arrow’s properties
of a desirable voting system, pairwise majority voting will always satisfy transitivity.
31. Borda count is a voting method often used in polls that rank sports teams.
Chapter 22/Frontiers in Microeconomics ❖ 77
32. Arrow’s impossibility theorem demonstrates the impossibility of the median voter theorem.
33. Arrow’s impossibility theorem shows that it is impossible to find a better voting system than pair-
wise majority voting.
34. Arrow’s impossibility theorem illustrates the difficulties in creating the perfect voting system.
35. Arrow’s impossibility theorem states that the majority rule fails to produce transitive preferences for
society.
36. The unanimity property states that the ranking between any two outcomes should not depend on
whether some third outcome is available.
37. In an instant runoff vote, candidates without any first place votes are eliminated.
38. Majority rule will produce the outcome most preferred by the median voter.
39. According to the median voter theorem, majority rule will produce an outcome that is inconsistent
with transitive preferences.
40. An implication of the median voter theorem is that Republicans and Democrats will try to align their
views with those of the median voter.
78 ❖ Chapter 22/Frontiers in Microeconomics
41. Political leaders are always aiming for an optimal combination of efficiency and equality.
42. In the field of study called political economy, economists make use of insights from the field of psy-
chology.
43. A “satisficer” is a person whose decisionmaking is the same as that predicted by mainstream eco-
nomic models.
44. Researchers have found that the systematic mistakes that people make in their decisionmaking in-
clude a lack of confidence in their own abilities.
45. Most economic models incorporate the assumption of rational behavior on the part of economic ac-
tors.
46. Studies of human decision-making have found that people do not give enough weight to a small
number of vivid observations.
47. Studies of human decision making have found that people are reluctant to change their minds.
48. Evidence from experiments in which real people play the ultimatum game supports the idea that
people care about fairness as well as about maximization of their personal wealth.
49. Based on studies of human decision making, many people care more about the fairness of a game
than about their personal winnings.
Chapter 22/Frontiers in Microeconomics ❖ 79
50. The tendency of many people to procrastinate supports the view that people are consistent over time.
51. Economic experiments show that people care more about winning a game than about its intrinsic
fairness.
52. A person’s tendency to smoke a cigarette after promising himself that he will quit is an example of
the behavioral economics insight that people are inconsistent over time
SHORT ANSWER
1. Explain what is meant by “asymmetric information.” Identify and explain the two basic types of
problems that arise when there is asymmetric information.
2. Explain how the presence of asymmetric information in car insurance markets may lead people who
are good drivers or even average drivers to choose not to buy car insurance unless the law requires
it.
80 ❖ Chapter 22/Frontiers in Microeconomics
3. Explain the Condorcet paradox. To which type of voting system does it apply?
4. Assume there are two major political parties: the Conservatives and the Liberals. What does the me-
dian voter theorem imply about the nature of the platforms (that is, policy stances) of the Conserva-
tives and Liberals?
5. How have insights from the field of psychology influenced the thinking of economists in recent
years?