Hatfield and McCoy Burn with Hatred for Each Other

question 6

Multiple Choice

Hatfield and McCoy burn with hatred for each other.They both consume corn whisky.Hatfield's utility function is U = W_H - W ²_M / 8 and McCoy's utility is U = W_M - W ²_H / 8, where W_H is Hatfield's whisky consumption and W_M is McCoy's whisky consumption, measured in gallons.The sheriff has a total of 28 gallons of confiscated whisky which he could give back to them.For some reason, the sheriff wants them both to be as happy as possible and he wants to treat them equally.The sheriff should give them each

• A)14 gallons.
• B)4 gallons and spill 20 gallons in the creek.
• C)2 gallons and spill 24 gallons in the creek.
• D)8 gallons and spill the rest in the creek.
• E)1 gallon and spill the rest in the creek.

---

Definitions:

Discount Bond

A bond that is sold for less than its face value.

Face Value

The nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate, representing its official worth or repayment value at maturity.

Yield-to-Maturity

The total return anticipated on a bond if it is held until its maturity date, incorporating both interest payments and the adjustment of the bond's value.

Semi-annual

Occurring twice a year; pertaining to events, reports, payments, or dividends that happen or are issued every six months.