Most MBA and other serious business students study in “teams.” Is there a potential tragedy of the commons within the study teams? Asked differently, what incentive problems do these teams have to overcome?Explain

Microeconomics:Decision-Making
Chapter 1: Microeconomics: a way of thinking about business

1. Most MBA and other serious business students study in “teams.” Is there a potential tragedy of the commons within the study teams? Asked differently, what incentive problems do these teams have to overcome?

How has your team sought to overcome the incentive problems? Why are teams generally small? What would be the consequence of doubling or trebling the size of study teams? How does team size influence the extent to which teams allocate “points” for members’ contributions to team projects?

2. What are the benefits in people specializing their efforts?

3. Some restaurants have their bartenders “tip pool”  Servers in the rest of the restaurant often do not tip pool. What are the problems of tip pooling? Why do bartenders often tip pool while other servers in the same restaurant do not? How do restaurants overcome the potential problems with tip pooling?

4. What are incentives and why are incentives important? Provide some examples? Why do incentives work? What are some potential problems of incentive systems?

Chapter 2: Principles of rational behavior in society and business

1. What are the costs and benefits of taking this course in microeconomics? Develop a theory of how much a student can be expected to study for this course. How might the student’s current employment status affect her studying time?

2. Explain why the free-rider problem is likely to be greater in a large group than in a small group?

3. “Tit-for-tat” is a strategy people adopt in cooperative relationships. This strategy means that people will work with others so long as others work for them. Why is tit-for-tat so widely adopted? What does it imply for management strategy with colleagues in a firm and with buyers and suppliers?

4. The common interest of people who are in a burning theater is to walk out in an orderly fashion and avoid a panic. If that is the case, why do people so frequently panic in such situations? Use rational behavior and the logic of collective action in your answer.

5. Define a free-rider in the workplace? Provide an example. In what ways do firms overcome the free-rider problems discussed in this chapter relating to large groups? Discuss six commitment mechanisms?

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