Question: . This is a household bargaining problem. Mr. and Mrs. John live in Town E. They are considering moving to one of four cities. The

. This is a household bargaining problem. Mr. and Mrs. John live in Town E. They are considering moving to one of four cities. The cities are different in terms of the jobs they offer to each spouse; also, they vary in terms of factors that are of differing importance to Mr. and Mrs. John. If they cannot reach an agreement about where to move, they will remain in Town E; otherwise, the various cities give:

CITY: Mr. John's Utility: Mrs. John's Utility:

A 200 600

B 275 450

C 100 250

D 400 300

a. Suppose that neither person likes Town E; giving each of them a utility of 0. Predict where they would move.

b. Suppose that both people find Town E okay, but not great: each gets a utility of 75. Predict where the couple would move and explain why the answer changed (or didn't change) from part a.

c. Suppose that Mrs. John has a great job in Town E, but Mr. John hates the place (her utility is 200; his is zero). Predict where the couple would move, and explain why the answer changed (or didn't change) from part a.

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