Describe the pareto-efficient 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 UG = bG -c·bj and UJ = bJ -c·bG.

a) Describe the Pareto-efficient allocations when c = 0

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

c) Is there a Pareto-efficient allocation if c = 1? Is there a Pareto-efficient allocation?

d) Is there a Pareto-efficient allocation if c > 1? Is there a Pareto-efficient allocation

Reference no: EM132790134

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