In a four person community, we have elicited each individual’s willingness to pay to build an...

In a four person community, we have elicited each individual’s willingness to pay to build an additional mile of a bike lane. Whatever amount is constructed, the community will split the cost evenly.

Bike Lanes (miles)	Avery WTP ($)	Billy WTP ($)	Cedric WTP ($)	Doug WTP ($)	Total WTP ($)
1	42	39	25	12	118
2	36	30	20	9	95
3	30	21	15	6	72
4	24	12	10	3	49
5	18	3	5	0	26

1. Suppose bike lanes can be built for 52 $ . mi

(a) (1 point) What is the efficient amount of bike lanes to build?

(b) (1 point) Will the majority vote accept this proposal?

2. Suppose the bike lanes can be built for 84 $ . mi

(a) (1 point) What is the efficient amount of bike lanes to build?

(b) (1 point) Will the majority vote accept this proposal?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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