A and B can live separately at a rent of $400/mo each, or together at a rent of $600. Each would be willing to give up $30/mo to avoid having to give up his privacy. In addition to the loss of privacy, joint living produces two other conflicts, namely, each has a particular behavior the other finds offensive: B is a trumpet player, and A smokes cigarettes. B would be willing to pay $60/mo rather than tolerate smoking in his house and $120/mo to continue playing his trumpet. A, for his part, would pay up to $100/mo to continue smoking and up to $90/mo to avoid listening to trumpet music. Will they live together? Explain carefully. Would your answer be different if A didn’t mind giving up his privacy?
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