You have an insane roommate who plays “Let it Go” (from Frozen) on repeat on her phone all the time and thinks that everyone should put on pink tutus and sing very loudly and dance to it. You share your apartment with him and with three others. Three of you suffer $25 of brain damage every night from the Frozen experience; one person suffers only $5; and the insane one gets $90 of pleasure.
1. Should he stop? What is the efficient outcome of the Frozen dispute?
2. Would it matter who owns the stereo and holds the lease? If you hold the lease, could he get you to let him sing? If he holds the lease, could you get him to stop? Would it matter if all of you had taken Economics and wanted to free-ride?
3. How would your answer to these questions change if all the anti-Frozen roommates developed great hatred of the song so they all suffer $40 of damage.
4. Read Robert Larson, “Frackonomics” in Real World Micro, article 6.3. Who benefits and who loses from fracking? Is fracking necessarily bad? Can we sure whether the winners’ gains exceed the losers’ losses? How might the winners from fracking compensate the losers? Do they? Why or why not?