Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 7

Twin brothers, Tom and Bill, constantly fight over toys. For instance, Tom will argue it his turn to play with a toy, while Bill argues it is his turn. Their parents frequently have to intervene in these disputes. Their mom has conceived an idea that might reduce these conflicts. In particular, every toy in the house would be "owned" by one of the boys. The owner would have complete authority over the use of the toy. The mom reasons that ownership would cut down on disputes. Any time, there is an argument over a toy, the owner gets the final and immediate say. The boys' dad is concerned that this idea will prevent the boys from learning to "share." He envisions that under the new system, Tom will not allow Bill to play with his toys and Bill will not allow Tom to play with his toys. The current system forces them to figure out a way to share the toys. Do you think that their dad's concerns are valid Explain.