Re: Isi 2016

Posted by Asd1995 on Mar 21, 2018; 11:46am
URL: http://discussion-forum.276.s1.nabble.com/Isi-2016-tp7608865p7608876.html

1. Everything is PO if the whole cake is utilized.
2. Cut it in half, otherwise you'll always get the smaller part.
3. mu <1 means that A still gets more marginal utility from having the cake herself than giving it to B. Notihng changes. Mathematically A optimises alpha plus mu - mu*alpha, where coefficient of alpha remains positive if mu <1

4. If mu>1 then A gets mroe marginal utility from giving the cake to B than having it himself, so he will never eat any cake himself ( he can always gain by giving it to B). So PO allocation is where there is nothing given to A ie B gets all of the cake.

A should not cut the cake: He is happiest if B gets the whole portion.