4. Player 2 Player 1 Self Interest Cooperation 1, 1 O,3 3,0 2, 2

5. Government (Authority/Power) People (Freedom/Power) Self Interest Cooperation RevolutionAnarchy Dictator Constitution Limited Government Balanced Equilibrium

9. Player 2 Player 1 Stag Rabbit 5, 50, 2 2, 0 1, 1

10. Government (Authority/Power) People (Liberty/Power) Cooperate Self Interest 5, 50, 2 2, 0 1, 1

11. The Constitution is a coordinated document The Constitution is not contract that needs to be enforced, it is more like a coordinated agreement between liberty and authority. It is in the best interest each player to both pursue their self interest and to limit their own self interest.

13. Justice Equilibrium Balance Order Unite Provide Protect Securing Liberty Life Liberty Property Authority Government Group Equality Liberty Individual Freedom Self Interest

14. So is Self Interest A positive natural resource?- Adam Smith Or War?- Thomas Hobbes Or something else? Does the purpose of government compete with or cooperate with the purpose of any economic system? The Preamble Purpose of Economic Systems- To allocate scarce resources that have alternative uses to their most useful place. Write 1 paragraph

15. Examples of Prisoner Dilemmas Mitt vs Newt – Republic Primaries Budget Crisis Price wars Paradox of thrift Government and the people Sports being a team member Tragedy of the commons Traffic Fishing rights Climate Resources Congress and spending

16. Free Market Principles Private Property Freedom of Enterprise Motive of Self Interest Competition System of Markets and Prices Limited Government Government Intervention Maintaining Legal and Social Framework Maintaining Competition Providing Public Goods and Services Redistributing Income Correcting for Externalities Stabilizing the Economy Correct Market Failures Authority Government Group Equality Liberty Individual Freedom Self Interest Justice Equilibrium Balance

17. Government Intervention Maintaining Legal and Social Framework Example: Create laws and provide courts, provide information and services to help economy function better, establish a monetary system, define and enforce property rights. Maintaining Competition Example: Create and enforce antitrust laws; regulate natural monopolies. Providing Public Goods and Services Example: Provide goods and services that markets are unable or unwilling to provide, such as national defense. Redistributing Income Example: Higher income tax rates for rich than for poor, provide social security, and aid to dependent children, Medicare, Medicaid. Correcting for Externalities Example: Taxes to reduce negative externalities, such as environmental pollution; subsidies to encourage positive externalities, such as education. Externalities exist when some of the costs or benefits associated with the production or consumption of a product "spill over" to third parties other than the direct producer or consumer of the product. Stabilizing the Economy Example: Use government budgets and/or the money supply to promote economic growth, control inflation, and reduce unemployment.