A positional externality
A) can only occur in sports.
B) arises in situations where absolute performance is judged.
C) results in under-investment in performance enhancement.
D) occurs when an increase is one player's performance reduces the expected reward of the other players.
E) is when the queue one is in moves slowly.

Question

Quizplus · Accepted Answer

A positional externality occurs when an increase in one player's performance reduces the expected reward of the other players. This can lead to under-investment in performance enhancement as players may feel that their efforts will not be rewarded if others also improve their performance. It can occur in various competitive situations, not just in sports.

A Positional Externality