Alice and Bob, who do not know each other, want a ticket to the hit show Economics!
Question:
Alice and Bob, who do not know each other, want a ticket to the hit show “Economics!” Only two tickets are left. One ticket is for a frontrow seat, and the other is in the back row. Both Alice and Bob value the front-row ticket at $100 and the back-row ticket at $50. Either ticket costs $20. If they go to the box office, each has an equal chance of getting the front-row ticket. If one goes to a ticket agent (who has special contacts) and pays a fee of $10, he or she will get the frontrow ticket. If both go to the ticket agent, each paying a fee of $10, they have an equal chance of getting the front-row ticket.
a. What type of game is this? What will the noncooperative solution be?
b. Does the existence of the ticket agent make society better or worse off?
Step by Step Answer: