Question

Ryan likes to listen to music while studying at home. His brother Isaac, however, needs peace and quiet in which to work. They both get an allowance and so have some money. To deal with arguments over whether music is played or not the parents decide that on Monday, Wednesday, Friday and Sunday peace and quiet must reign, but that on Tuesday, Thursday and Saturday it’s ok to play music. Note that the parents set this rule just to avoid quarrels between the two brothers; hence they do not need to stick to the rule as long as there is no quarrel. Note further that no headphones are allowed. Isaac values peace and quiet at $10 per day. Ryan values the ability to play music at $7 per day. If the boys are allowed to negotiate between themselves on which day(s) does music get played? Explain.

Answer 1

Ryan and Isaac are two brothers, Ryan likes to listen music while studying at home and Isaac needs peace and quiet to work. So, their choices contradict to each other. Now, Isaac values peace and quiet at $10 per day, => Isaac can pay maximum $10 for peace and quiet. On the other hand Ryan values $7 per day for music, => if Isaac pays Ryan more than its valuation for music then Ryan will stop playing music and Isaac will get peace and quiet in work.

Here Isaac’s valuation is more than Ryan valuation implied negotiation between themselves is possible. So, here Isaac will pay more than or equal to $7 but less than $10 and Ryan will stop playing music.