Chapter EMB, Problem 7MCQ

To determine

To state: The aim of bounded self-interest.

Answer to Problem 7MCQ

The correct option is e, i.e., donors give anonymously to charity.

Explanation of Solution

Neoclassical economic models rest on assumptions of self-interested behavior, which is seldom in short supply. But some behaviors exhibit elements of altruism uncharacteristic of Homo economicus. Billionaire businessman and investor W is apparently not Homo economicus, having pledged to give at least half of his fortune to charity. Americans recycle tens of millions of tons of materials each year to the benefit of the environment and future generations. And the Bureau of Labor Statistics estimates that each year more than a quarter of all Americans volunteer some of their time to help less fortunate individuals. Charitable efforts can be self-serving if they bring attention, gratitude, tax advantages, or other benefits to the donors. But to the extent that some decisions are made selflessly,

Bounded self-interest—self-interest that leaves room for concerns about the welfare of others—represents the third category of deviance from neoclassical economic models.

So, the correct option is e, i.e., donors give anonymously to charity.

Economics Concept Introduction

Introduction:

Bounded self-interest is self-interest that leaves room for concerns about the welfare of others.