Question

Question 25 page 315 Chapter 13 Becky and Sarah are sisters who share a room. Their room can easily get messy and their parents are always telling them to tidy it. Here are the costs and benefits to both Becky and Sarah, of taking the time to clean their room. If both Becky and Sarah clean, they each spends two hours and get a clean room. If Becky decides not to clean and Sarah does all the cleaning, then Sarah spends 10 hours cleaning (Becky spends 0) but Sarah is exhausted. The same would occur for Becky if Sarah decided not to clean – Becky spends 10 hours and becomes exhausted. If both girls decide not to clean, they both have a dirty room.

How might the assignment of property rights be arranged so that Becky and Sarah are incentivized to achieve a clean room? Yes, you get to play the role of the parent here.

Answer 1

in this case the property rigths should be assingened equally for Sarah and Becky to incentivize to acheive a clean room.

In the table shows the pay offs of both Sarah and Becky , both of them is better off at the pay off matrix A. Thisis the nash equilibrium in which no payer has an advantage to change his or her strategy given what the other player is doing. If becky and sarah dont clean the room, they get their romm messy , so it will be better to clean the room togrther.