Question

in 100 words Compare and contrast two events motivated by incentives, one where the self-interested behavior was good for society and the other where it was bad.

Answer 1

Self interested behavior is an action that elicit most personal benefit. For example- A baker who bakes products is doing for his profit. These efforts make sure that there is food available in form of bakery products.

In financial markets, people act in self interested behavior. Example- Increase in interest rates may make people o save more but this will cause aggregate demand to go down and unemployment may go up.

Similarly, share market speculations make people act in self interest but thi leads to market crash.