6
Perfectly Legal
Nine people live on island A and one person lives on island B. The people of island A unanimously vote to disallow using resources on island B, including the person on B. Explain the moral hazards and the likely destructive consequences. Identify two alternative incentive systems that produce better long-term outcomes.
—Accel. Topic: Incentive Engineering. Module: Macro-Incentives.
The governor of the Great Blue State of California looked at the news page and groaned. He handed his tablet to the attorney general. “I think we’ve suffered a serious leak.”
The attorney general took the tablet and scanned the article. He was shaking as he returned it to the governor. “‘Cogent News’ my eye. All she ever reports are facts. She has no idea what truth is, or how much more im
