Describe the pareto effcient allocations

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A firm has a fixed sum of money B to allocate in bonus payments between two managers. Each manager appreciates receiving the bonus but resents that the other manager receives a bonus as well. Let the preferences of the two managers be given by U_G = b_G - c · b_J and U_J= b_J - c · b_G

(a) Describe the Pareto effcient allocations when c = 0.

(b) Is there a Pareto effcient allocation when 0 < c < 1? If so, describe the Pareto effcient allocations.

(c) Is there a Pareto effcient allocation if c = 1? Is there a Pareto effcient allocation?

(d) Is there a Pareto-ecient allocation if c > 1? Is there a Pareto effcient allocation?

Reference no: EM132795300

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