Evaluating whether a deal is good or bad is relative and depends on various factors. If we judge it solely based on the reservation point (the lowest acceptable outcome), then both parties got a "good" deal. You got $100 more than your reservation point, and your counterpart got $1000 more than theirs. Both parties obtained a value higher than their minimum acceptable outcomes. a) Good deal b) Bad deal
Evaluating whether a deal is good or bad is relative and depends on various factors. If we judge it solely based on the reservation point (the lowest acceptable outcome), then both parties got a "good" deal. You got $100 more than your reservation point, and your counterpart got $1000 more than theirs. Both parties obtained a value higher than their minimum acceptable outcomes. a) Good deal b) Bad deal
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Evaluating whether a deal is good or bad is relative and depends on various factors. If we judge it solely based on the reservation point (the lowest acceptable outcome), then both parties got a "good" deal. You got $100 more than your reservation point, and your counterpart got $1000 more than theirs. Both parties obtained a value higher than their minimum acceptable outcomes.
a) Good deal
b) Bad deal
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