Suppose, in Game 1, Jack places two $5 bills into two envelopes (one in each). But just before he gives the envelope to each recipient, he is told that actually each dollar given to one of the recipients (call this re cipient Person A) will become $2 and each dollar given to the other recipient (call this recipient Person B) remains the same (i.e. will not be doubled).
Do you agree with the following statement?
“It would be Pareto improvement if Jack gives both envelopes (i.e. $10 in total) to Person A and leave nothing to Person B “

Question

Suppose, in Game 1, Jack places two $5 bills into two envelopes (one in each). But just  before he gives the envelope to each recipient, he is told that actually each dollar given  to one of the recipients (call this re cipient Person A) will become $2 and each dollar  given to the other recipient (call this recipient Person B) remains the same (i.e. will not be  doubled). 
 Do you agree with the following statement? 
 “It would be Pareto improvement if Jack gives both envelopes  (i.e. $10 in total) to Person A  and leave nothing to Person B “

Accepted Answer

Disagree.

Answer

Agree. In this way $10 becomes $20, which is more efficient.

Crowdly

Suppose, in Game 1, Jack places two $5 bills into two envelopes (one in each). B...

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