Statement & Assumption — “Various state governments will compete to announce cash prizes they intend to give Olympic medal-winners.” Which assumptions are implicit? I. Such announcements will boost the morale of players. II. Winning an Olympic medal is a matter of pride for state governments.

Introduction / Context:
The prediction that states will “compete” to announce prizes suggests a reputational or pride dimension. While prize schemes can also aim at athlete morale, that is not essential to explain inter-state competition.

Given Data / Assumptions:

• States are expected to vie in public announcements of cash rewards.
• Target: Olympic medal-winners.

Concept / Approach:
Competition among states over reward announcements presupposes the symbolic value of medals to a state’s image (Assumption II). By contrast, boosting athletes’ morale (Assumption I) may be a benefit but is not necessary to explain why governments would compete in announcements.

Step-by-Step Solution:
Assumption II: If medals were not a matter of state pride, competitive announcements would lack political/ reputational motive. Hence II is implicit.Assumption I: Even if morale effects exist, they are not required to explain the predicted behaviour. Not implicit.

Verification / Alternative check:
Publicly visible rewards often serve signalling objectives—aligning with II.

Why Other Options Are Wrong:
Including I mistakenly treats an incidental benefit as a necessary premise.

Common Pitfalls:
Assuming every incentive is designed primarily for intrinsic athlete motivation rather than public signalling.

Final Answer:
Only Assumption II is implicit.