Answer to Question #49582 in Macroeconomics for Chris-Obi

Question

Tokyo has won the right to host the 2020 Summer Olympics, but it might have made itself worse off by doing so. Use the appropriate model to explain why this is so.

Answer 1

The International Olympic Committee went for a familiar, trusted host, selecting Tokyo for the 2020 Games and signaling that playing it safe was preferable to more risky picks like Sochi and Rio. Tokyo, which hosted the 1964 Olympics, billed itself as the "safe pair of hands" at a time of global political and economic turmoil. With Madrid's bid dogged by questions over Spain's economic crisis and Istanbul handicapped by political unrest and the civil war in neighboring Syria, Tokyo offered the fewest risks. "The certainty was a crucial factor -- the certainty that they could deliver," IOC vice president Craig Reedie of Britain said.