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Abstract

Claim-makers/social entrepreneurs increase the likelihood that something becomes an externality by creating typical examples that quickly convey the nature of the externality, publicising stories about villains causing extreme harm to innocent victims and expressing social approval for their supporters and disapproval of their opponents. Unfortunately, simple typical examples tend to create simplistic views about various externalities, horror stories tend to invoke fight or flight responses which raises transactions costs and increases the difficulty of internalising externalities, and seeking social approval may discourage opponents from expressing disagreement so that uninformed people will assume that a false externality is true because there is little or no dissent.

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