Consider a group of students who share a bathroom, and there are no janitorial services provided. Some of the students prefer a clean bathroom; others have a high tolerance for messiness.
(a) Explain why, using concepts in this chapter, there is a good chance that the bathroom will end up a mess.
(b) Are there circumstances in which the mess is Pareto optimal? Are there circumstances where the mess is a market failure?
(c) Consider several ways to reduce the mess:
(i) The students work out a cleaning schedule among themselves. Each student is honor-bound to comply, but nobody keeps track.
(ii) Students work out a cleaning schedule among themselves. Each student who cleans knows who the previous cleaner was and grades that student on how well she did.
(iii) The building manager institutes a fee for all building residents to pay for a custodian.
Which is likely to be easiest to get started? What outcome do you expect for each of these options? Which is most likely to lead to peaceful relations among the students?