Class 32: The rationing

Today, Mr Rizzo draws 5 fishes and 12 people on the board to illustrate the idea of rationing: equally divide the fish to all 12 people. Some of the sample rationing criteria are need, queue, lottery, equal share, might makes right and merit. None works better compared to the price system as each of them have the information problem and efficiency problem. Therefore, we have to evaluate the rationing mechanism from multiple perspectives. With that he introduces the idea of competition arose from scarcity. An effective rationing system would be a system that encourage constructive competition so that the world becomes richer.