Earlier in the year we talked about pareto equilibriums with decision making. In one situation we had a triangle with each point representing different peoples preferences. In that situation there was no equilibrium because the preferences moved around the triangle. According to professor Coppock agent A should accept agent B's proposal so long as it didn't negatively affect agent A. I however disagree with this statement because I'm not accenting any proposals that benefit someone else and not me. Ted brought up a real life example of this which is a variation of the Ultimatum Game. Let's say there are two people with an equal claim to 100 dollars and both have different roles. One decides how to divvy up the money and the other has the power to accept or reject the proposal. If agent b rejects agent a's offer then neither gets the money but if they accept then the money is divided up according to the proposal. Ted said he would accept any amount of money so long as the money went straight to his bank. I refuse to accept any amount of money less than 20 dollars. If I am a rational consumer I should accept any amount of money because I get some utility even it it's only a penny. I will not reward the greedy bum who offers me less than 20 dollars because the utility gained from the money is less than the utility gained from spiting the other person.
No comments:
Post a Comment