Suppose, in Game 1, Jack places two $5 bills into two envelopes (one in each). But just before he gives the envelope to each recipient, he is told that actually each dollar given to one of the recipients (call this re cipient Person A) will become $2 and each dollar given to the other recipient (call this recipient Person B) remains the same (i.e. will not be doubled).
Do you agree with the following statement?
“It would be Pareto improvement if Jack gives both envelopes (i.e. $10 in total) to Person A and leave nothing to Person B. “ Explanation: The original statement in this question was:
" It would be Pareto efficient if Jack gives both envelopes (i.e. $10 in total) to Person A and leave nothing to Person B. "
This statement is not incorrect, but it is also awkwardly stated and lacks of clarification (Kudos to those who have chosen Choice A for the correct reason). So we changed it to the current statement:
“It would be Pareto improvement if Jack gives both envelopes (i.e. $10 in total) to Person A and leave nothing to Person B. “
This statement is much clearer, and the correct answer will be Choice B. Given that we revised the question after some students have attempted this question, we give both answers 100%.

Question

Suppose, in Game 1, Jack places two $5 bills into two envelopes (one in each). But just  before he gives the envelope to each recipient, he is told that actually each dollar given  to one of the recipients (call this re cipient Person A) will become $2 and each dollar  given to the other recipient (call this recipient Person B) remains the same (i.e. will not be  doubled). 
 Do you agree with the following statement? 
 “It would be Pareto improvement if Jack gives both envelopes  (i.e. $10 in total) to Person A  and leave nothing to Person B. “ Explanation: The original statement in this question was:  
 " It would be  Pareto efficient  if Jack gives both envelopes  (i.e. $10 in total) to Person A  and leave nothing to Person B. " 
 This statement is not incorrect, but it is also awkwardly stated and lacks of clarification (Kudos to those who have chosen Choice A for the correct reason). So we changed it to the current statement: 
 “It would be Pareto  improvement  if Jack gives both envelopes  (i.e. $10 in total) to Person A  and leave nothing to Person B. “ 
 This statement is much clearer, and  the correct answer will be Choice B. Given that we revised the question after some students have attempted this question, we give both answers 100%.

Accepted Answer

Agree. In this way $10 becomes $20, which is more efficient.

Answer

Disagree.

Crowdly

Suppose, in Game 1, Jack places two $5 bills into two envelopes (one in each). B...

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