cascyrio2002
01.07.2021 •
Business
Roommate Total Willingness to Pay Consumer Surplus (Dollars) (Dollars) Manuel Shen Antonio Dmitri In order to split the cost in a way that ensures that everyone benefits, the cost could be divided up based on the benefits each roommate receives. The practical problem with this solution is that each roommate has an incentive to the value of the movies to him. Suppose they agree in advance to choose the efficient number and to split the cost of the movies equally. True or False: When Manuel is asked his willingness to pay, he will have an incentive to understate the value of the movies to him. True False This examples teaches you that the optimal provision of a public good will occur if individuals an incentive to hide their valuation of the good.
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