Suppose Oscar and Felix Share an Apartment

question 39

Multiple Choice

Suppose Oscar and Felix share an apartment. Oscar likes to leave his dirty dishes in the sink, and this really bothers Felix. When Oscar leaves his dirty dishes in the sink, Oscar's surplus from their living arrangement is $400 per month, and Felix's surplus is $300 per month. On the other hand, when Oscar does not leave his dirty dishes in the sink, Oscar's surplus from their living arrangement is $350 per month, and Felix's surplus is $325 per month. There are no rules or regulations that prevent Oscar from leaving his dishes in the sink. In this case, the socially optimal outcome can be achieved:

• A)if Felix gives Oscar $25 per month to stop leaving his dishes in the sink.
• B)if Felix gives Oscar $50 per month to stop leaving his dishes in the sink.
• C)if Felix gives Oscar more than $75 per month to stop leaving his dishes in the sink.
• D)without any intervention.

---

Definitions:

Problem-Strategy

An approach or plan developed to solve a problem or overcome challenges.

Confirmation Bias

A tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence.

Framing Effect

The tendency of people to react differently to a particular choice or situation depending on how it is presented.

Heuristics

Mental shortcuts or "rules of thumb" that simplify decision-making processes, often used to make quick, efficient judgments.