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PEA 2026Question 17mcqModerate Under review
This item is under review.

Suppose there are two agents AA and BB with utilities uA=xA+yAm2(xAyA)2,uB=xB+yB,u_A = x_A + y_A - \tfrac{m}{2}(x_A - y_A)^2, \qquad u_B = x_B + y_B, where xix_i and yiy_i are the amounts of goods XX and YY consumed by agent i{A,B}i \in \{A,B\}. The total endowments are xx and yy. Initially AA owns the entire endowment of YY and BB owns the entire endowment of XX. Then AA will voluntarily transfer a positive amount of YY to BB if

Answer under review

Final answer

Option A