Every November, Ushi and Kabir each face the choice between burning their leaves or stuffing them into garbage bags. Burning the leaves is much easier but produces noxious smoke. The utility values for each person, measured in utils, are listed in the table for each of the four possible combinations of actions:

		Ushi
		Burn	Bag
Kabir	Burn	Kabir: 4	Kabir: 8
		Ushi: 4	Ushi: 2
	Bag	Kabir: 2	Kabir: 6
		Ushi: 8	Ushi: 6

a. If Ushi and Kabir are utility maximizers and make their decisions individually, what will they do?

multiple choice 1

• Both burn leaves.

• Kabir bags leaves and Ushi burns leaves.

• Both bag leaves.

• Ushi bags leaves and Kabir burns leaves.

b. How will your answer to part (a) differ, if at all, if Ushi and Kabir can make binding agreements with each other?

multiple choice 2

• Ushi bags leaves and Kabir burns leaves.

• Both burn leaves.

• Both bag leaves.

• Kabir bags leaves and Ushi burns leaves.

Now suppose the payoff matrix is as follows:

		Ushi
		Burn	Bag
Kabir	Burn	Kabir: 6	Kabir: 8
		Ushi: 6	Ushi: 2
	Bag	Kabir: 2	Kabir: 4
		Ushi: 8	Ushi: 4

c. What will they do this time if they can make binding agreements?

multiple choice 3

• Both bag leaves.

• Ushi bags leaves and Kabir burns leaves.

• Kabir bags leaves and Ushi burns leaves.

• Both burn leaves.