What is the maximum total benefit generated

Reference no: EM133276716

Question - Rebecca and John want to see a movie together. The tickets together cost $30. Seeing the movie together is worth $45 to Rebecca and $20 to John. Seeing the movie apart is worth $20 to Rebecca and $5 to John. Not seeing a movie at all is worth $0 to either person. In order for John to see the movie at all, Rebecca needs to buy him a ticket, since she lives closer and can get there faster to stand in line.

A. Find the outside option value for each person Ex Ante B. What is the maximum total benefit generated by both people working together?

C. Find the nash bargaining payoff for each person. Who has to pay who and how much to achieve these payoffs? Ex Post Now assumes that Rebecca already purchased the tickets. John wants to renegotiate.

D. Find the new outside option for each person.

E. Find the new nash bargaining payoff for each person. Who has to pay who and how much to achieve these payoffs?

Reference no: EM133276716

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