The non Pareto- optimal equilibria characterizing games of plain substitutes and complements:
A)yield conflicting results.
B)social interactions may lead to unattractive outcomes.
C)indicate that Adam Smith's invisible hand works properly.
D)imply that pursuing self- interest always achieve the full economic potential.

Question

Quizplus · Accepted Answer

Non Pareto-optimal equilibria in games of plain substitutes and complements can lead to unattractive outcomes due to social interactions. This means that pursuing self-interest may not always achieve the full economic potential, contradicting answer choices C and D. However, conflicting results are not necessarily applicable here, as it is possible for the equilibria to be clear and distinct, but still not Pareto-optimal. Therefore, option B is the best choice.

The Non Pareto- Optimal Equilibria Characterizing Games of Plain Substitutes