Bart and Lisa are kids. Their parents want to get a pet to keep them busy during a pandemic but they must choose between a dog and cat. Bart's value of the cat is $10 and his value of the dog is $20. Lisa's value of the cat is $30 and her value of the dog is $10. 1. What is the efficient pet? Let's imagine that their parents flip a coin to decide who gets to choose the pet. Heads Lisa chooses and tails Bart chooses. 2. If the coin comes up heads and there are no barriers to negotiation, what will Lisa choose? 3. If the coin comes up tails and there are no barriers to negotiation, what will Bart choose?
Bart and Lisa are kids. Their parents want to get a pet to keep them busy during a pandemic but they must choose between a dog and cat. Bart's value of the cat is $10 and his value of the dog is $20. Lisa's value of the cat is $30 and her value of the dog is $10.
1. What is the efficient pet?
Let's imagine that their parents flip a coin to decide who gets to choose the pet. Heads Lisa chooses and tails Bart chooses.
2. If the coin comes up heads and there are no barriers to negotiation, what will Lisa choose?
3. If the coin comes up tails and there are no barriers to negotiation, what will Bart choose?
4. What if there ARE barriers to negotiation and the coin is heads, what will Lisa choose?
5. What if there ARE barriers to negotiation and the coin is tails, what will Bart choose?
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