Answering the questions. Social Sciences Coursework

Examination
Student’s Name
Institution Affiliation
Examination
SECTION A
Question 1
Public goods are services and commodities that are made available to members of the public by their government (Anders & Sedlmaier, 2017). Public goods are payable collectively by the general public to its government through taxation. The general public pays for these commodities and services indirectly without their knowledge. The government imposes taxes on other commodities like fuel products and many other services to get the funds to cater for the provision of public goods. Examples of available goods include providing clean water to the general public, providing national security, and providing law enforcement through the police service and also the administration of justice through law courts. According to Anders and Sedlmaier (2017), justice is rendered to all the citizens equally since when an aggrieved person is filing a case in a court of law, no charges are imposed on them since those charges are catered for by the government and the general public pay them collectively through taxes.
Question 3
Moral hazard is a term mostly used in economics. Moral hazard refers to a situation where two or more individuals are required to buy a product (Mumtaz, 2020). With more understanding of the product than the other parties, one of the parties seems to have a condition called asymmetric information. One party can change the terms of service after entering into an agreement with other parties, as that party believes that they cannot suffer any repercussions following awards. Moral hazard mostly occurs in insurance and also lending companies. A lending company might think to review its lending interest rates to its clients after the clients acquire loans from them. Clients end up paying more money as interest against their agreement. Moral hazards affect those other parties as they end up making losses while the other party is enriching itself while killing those others. The situation is terrible as it also contributes to the killing of the economy of the entire country.
Adverse selection is when buyers have more information than sellers have, and the opposite is also true. The information may be about the quality of the product involved. Most people who tend to have more knowledge about a product are the sellers. Sellers might then decide to deceive buyers by selling them counterfeit goods that might have adverse effects on them or goods that are not durable.
An excellent example of this adverse selection in markets is in the selling of second-hand cars. The seller might have prior knowledge about the defect a car possesses and ends up selling the car to a buyer at a high cost without disclosing the fault to the buyer. Insurance industries are also affected by adverse selection, where those people in high-risk lifestyles or those who engage in dangerous jobs tend to purchase products like a life insurance policy. In this case, the buyers tend to have more knowledge about the product than the sellers. The above scenario forced the insurance companies to over-charge those policies so that when a risk arises, they have money in their possession to finance their client.
Question 6
An authoritarian rule is a form of government with no opposition to what it does. Mostly there is no multi-party system in those countries. Authoritarian regimes are primarily of two types; autocratic and oligarchic forms. They involve using a central power where people are entirely oppressed; there is no rule of law and no free and fair democratic elections. Free and fair elections refer to elections that are not marred by election malpractices such as the rigging of votes in favour of a specific party or a particular candidate (Tansey, 2016). The party in power tends to remain in force for many consecutive elections, and the government does not change. People are oppressed such that there is no rule of law, meaning that justice is not rendered to the citizens. The citizens that well off tend to buy their justice in law courts and emerge victors after oppressing others. Media houses are denied that freedom of highlighting the aggrievances of the people by media houses being closed down and also by restricting where they can and cannot go, and even those countries tend to have a single media house that is owned and controlled by the government. An example of an authoritarian regime is in the People’s republic of China. Research has classified the authoritarian regime in China as a fragmented one or a negotiated state. According to Lei (2019), citizens in China who have attained higher education are more likely not to involve themselves in local politics and elections. The same people have negative attitudes towards democratic values in comparison to those individuals with compulsory education (Lei, 2019). Other countries that experience authoritarian regimes include Russia, Belarus, Azerbaijan, Cuba, Chad etc.
Question 9
A principal-agent problem is a situation that arises when the decision of an agent who is chosen to act on behalf of a principal owner does not fit the wishes desires of the principal. This situation mostly arises in the stock exchange sector, when the agents that are hired by the company, a company that is led by the chief executive officer, decides to sell the shares. Still, the principle that had invested in the claims is waiting for them to accrue good interest. The situation brings about a conflict of interest between the agent and the principal. The condition may also arise when the CEO decides to pay the principles a certain percentage of interest on their shares and use the rest for expanding the salaries of his managers.
An example of a principal-agent problem is where, as part-owners, the leading investors of a business are principals who depend on the chief executive officer (CEO) of the company as the representative to implement a plan in their economic interest. Such that, investors want the stock to grow in price or earn dividends, or both. If the CEO decides instead to expand all the profits or pay significant salaries to managers, the principals can feel that their agent has let them down. For the principal-agent problem, there are a variety of solutions, and many of them involve reiterating requirements and tracking outcomes. Usually, the principal would be the only individual who can or can fix the issue. In economics and sociology, the principal-agent question has become a normal consideration. Prior studies described a theory of a system of control designed to escape what they described as the expense of the agency and its purpose, which they described as the separation of ownership and control. When a principal recruits an agent, this division of control happens. The principal assigns to the agent a degree of autonomy and the ability to demand choices. But the shareholder maintains control and responsibility of the properties for any damages. The principal should not, practically, continually track the actions of the agent. The threat of an agent shirking liability, making a wrong decision, and behaving in a way that is detrimental to the best interest of the principal can be described as the expense of the agency. When dealing with concerns that result from the actions of an agent, extra service costs may be incurred.
SECTION B
Question 1
According to collective action theory, group A will get the government to change its policies. In 1965, Mansur Olson published the collective action theory. He suggests that every group of individuals seeking to provide a public benefit has difficulty doing so efficiently. Individuals have incentives to use the efforts of others in specific groups, on the one hand. On the other hand, the size of a group is substantial and hard to optimally determine. Since the common goal of togetherness is the furtherance of the common interests of the entire group, the group will fail to achieve its purpose if it does not further the interests of its members. If a common interest exists, any action by a single individual that is not organized will either fail the entire group and not achieve its objectives.
An example is explained as the impact of a single individual who barely influences the situation facing a company. However, every individual still is happy on any improvements whether they were part of it or not. Therefore, a conflict of interest exists between the collection and individualism best action. No one is interested in bearing the expenses for improving the common part of all, but everyone is trying to gain maximum benefit greedily. The collective action theory will favour group A individuals since they are fewer compared to those in group B due to each group member's effort.
Question 3
The theory of impossibility by Kenneth Arrow, also called the general possibility theorem, helps make collective decisions on behalf of the masses the general public in situations where there are alternatives to choose from. The other options could be public projects, candidates in an election, policies distributions of income among the society members (Challoumis, 2019). There are various people whose preferences will dictate some of this choice. The question might be: what procedures are to be used in deriving, from what is known or can be found about their preferences, a collective ordering of the alternatives from better to worse. Arrow’s theorem asserts that there are no such procedures if none, anyway, that can wholly satisfy certain quite reasonable assumptions about the autonomy of the people and their preferences.
The Four Fairness Conditions of Arrow
The fairness condition is the condition that is supposed to be right in the usual sense, but, in reality, they are not right.
Will of the People or the Majority Fairness Scenario
Many troubles that occur is social order can be shown using a simple but essential example. For example, if there exist three choices namely CC, BB, and AA. The choices are to be made by three individuals who are numbered 1, 2, and 3. The selections are to dictate the choice and each individual required to arrange the samples from the best to the worst depending on their opinions. They each order their options as follows; ABC, BCA, and CAB.
The outcome shows that the first individual values AA to BB, BB to CC, and AA to CC. The second individual values BB to C. If it is required to isolate a single social numbering that would show the preference of the three individuals, one ends up selecting whichever choice is socially acceptable or the best. There should exist no tie in the first position; hence, the selection can be made as the one which is as good as the other. Given the selection are made pair by pair and the issue is put into a balloting process, the choice that most voters prefer is considered as socially or is preferred (Clark et al., 2017). Conclusions can be made that AA is socially preferred to BB because two individuals selected AA to BB, while one voter selected BB to AA. There is also the social preference for BB to CC. It is expected that AA is socially selected than CC. According to the theory of election by Arrow, a voting method that is democratic free, and fair is a mathematical impossibility.
The Monotonicity Fairness Criterion
The elections are held, and among many candidates, candidate Z emerges the winner in an election. In the case of re-election and the conditions for the election favour candidate, Z. Candidate Z must then remain the election winner.
Independence of Irrelevant Alternative fairness Criterion
Independence of Irrelevant Alternative fairness Criterion means that in the case of an election where candidates A and B were candidates. Votes are counted, and B emerges a victor. Candidate A refuses, votes are recounted, and in the process of recounting, candidate A changes his mind and supports candidate B. Candidate B should remain the win...