Externalities and the Environment

 

 

Meyer describes the “Tragedy of the Commons.” The IMF article explains how this type of problem is an example of an “externality.” What is an externality? What might be a good government policy to solve the problem of the environmental externality that leads to high greenhouse gas emissions?
Moral Hazard and Adverse Selection

“Moral hazard” is a term often used in the context of peoples’ behavior once they have insurance. Szuchman and Anderson explore the idea of moral hazard in personal relationships. How would you define moral hazard? Provide an example of a moral hazard that you have observed in your own community or workplace.

How does moral hazard differ from adverse selection? Provide an example to illustrate this concept.

 

Sample Solution

Towards resolving the 30-year terrorism definition conflict, Weinberg, Pedahzur and Hirsch-Hoefler (2004) compared Schmid’s definition, (see excerpt below), a product of a survey in which 22 definitional elements were identified in the 109 definitions of terrorism retrieved from 200 participants; to the application of the concept in three terrorism-based academic journals: Terrorism, Studies in Conflict and Terrorism, and Terrorism and Political Violence. Of the 22, Weinberg, Pedahzur and Hirsch-Hoefler (2004) observed that only 16 elements appeared in Schmid’s definition (p. 780).

Terrorism is an anxiety-inspiring method of repeated violent action, employed by (semi-) clandestine individual group, or state actors, for idiosyncratic, criminal, or political reasons, whereby – in contrast to assassination – the direct targets of violence are not the main targets. The immediate human victims of violence are generally chosen randomly (targets of opportunity) or selectively (representative or symbolic targets) from a target population, and serve as message generators. Threat – and violence-based communication processes between terrorist (organisation), (imperilled) victims, and main target (audiences (s)), turning it into a target of terror, a target of demands, or a target of attention, depending on whether intimidation, coercion, or propaganda is primarily sought (Schmid & Jongman, 1988, p. 28)

For their study, Weinberg, Pedahzur and Hirsch-Hoefler selected 73 definitions from the 55 articles and compared these to Schmid’s (1988) 22 elements. The exercise yielded mixed results. For example, while some components such as the psychological elements of terrorism were in decline (41.5% to 5.5%), probably due to the absence of contributors from the field of psychology; the authors of the articles in the three journals made no variations between terrorist targets, that is – “combatants and non-combatants” or the “immediate target and wider audience” (p. 782). However, certain traits remained prevalent across both studies, and were used by the authors to generate another definition: “terrorism is a politically motivated tactic involving the threat or use of force or violence in which the pursuit of publicity plays a significant role” (p. 782).

The significant achievement of the trio lay in the ability to adopt observable and measurable terrorism components in designing their definition of terrorism. Thus, a remarkable achievement for research in the field of terrorism, especially media-related terrorism research as a result of the renewed fo

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