Divya and Emily have to divide a bag of 200 pistachios between them. They derive enjoyment from pistachios according to the following hedonic utility functions: uD(x) = √x for Divya; uE (x) = 2√x for Emily (where x is the number of pistachios eaten). (a) Consider all possible ways of dividing the pistachios. Treating the utilities given above as the two agents" "levels," which division is best according to the utilitarian criterion? (b) Which division is best according to the leximin criterion? (c) Which is best according to the Nash criterion?

Divya and Emily have to divide a bag of 200 pistachios between them. They derive enjoyment from pistachios according to the following hedonic utility functions: uD(x) = √x for Divya; uE (x) = 2√x for Emily (where x is the number of pistachios eaten). (a) Consider all possible ways of dividing the pistachios. Treating the utilities given above as the two agents" "levels," which division is best according to the utilitarian criterion? (b) Which division is best according to the leximin criterion? (c) Which is best according to the Nash criterion?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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