Tankless Job

 

Phil is trying to sell the house next door to a couple. In order to make the house as desirable as possible, he wants to put his family’s best foot forward. He wants the buyers to want to live beside his family. So, he has the kids outside gardening. This demonstrates adverse selection, signaling and the importance of spillover effects/positive externalities. Good, helpful neighbors are desirable and can increase a property’s value, especially if they take good care of their yard. Thus, there are positive externalities associated with landscaping. To discuss signaling and adverse selection, consider that someone is less likely to move if the neighbors are good than if they are bad. So, it’s entirely reasonable to consider the housing market as being characterized by adverse selection. Phil is doing all he can to signal that he and his family are good neighbors in order to get the couple to by the house and to pay a high price for it. But are they good neighbors? (At the end of this clip, you’ll see the other possible new neighbors. Which new family would each of the Dunphys prefer to live beside? Why?)

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Unhealthy Competition

 

Economics often suggests that competition improves efficiency. Jay seems to agree. He fosters competition within his family to help them achieve their goals. But are they really achieving those goals? The truth comes out in this clip. It turns out that they’re a family of cheaters and not a family of winners.

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Winning at all costs

 

Cam is desperate to win the football game and be a winner. He overhears the opposing team’s coach plans for the next play. Does he act on this insider information? Yes. Using insider information in buying and selling financial securities is illegal because it gives someone an unfair advantage. Similarly, many would consider Cam’s actions cheating. In fact, Cam feels really guilty about it but Mitch encourages him to keep up the facade because winning is also important to him.

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