Question

Tom, Mary and Jill have apartments in the same building. A security system for their building costs $750. Tom is willing to pay $100 for the security system, Mary is willing to pay $300 and Jill is willing to pay $300. They have a meeting to vote on whether to pay $250 each for the security system. At least two of them must vote for the system to be installed before the vote is passed. The efficient outcome is to have the security system installed. After the meeting the security system will __________, which illustrates

Answer 1

Answer:

The correct answer is:  be installed; the free-rider problem.

Explanation:

The free-rider problem is a conflict that takes place when, within a group of people, a small part of it is not willing to contribute equally or is not willing to contribute at all in something that could be beneficial evenly for all of them. In front of this situation, a consensus is held to determine how to enforce that small part to contribute accordingly.

In the case, as Mary and Jill are willing to pay more than what they should ($300 instead of only $250) it is likely that eventually the security system will be installed since two out of three votes are needed for that to happen.