you decided to attend an academic management conference being held at the University of Nebraska. In the interest of saving some money, you agree to room with another classmate from your cohort. When you get to the room, you realize your “roommate” for the week is not only a smoker, but learn they made the room reservation in a “smoking permitted” room. You have asthma, and are particularly sensitive to smoke. Because a fascinating and inspired economics professor/wildlife photographer is speaking at the conference, the hotel is sold out for the time of the conference so you cannot move to a different room.
A. According to the Coase theorem, what determines whether your roommate smokes in the room?
B. How do you think Friedman, Keynes, and Raworth would approach this dilemma?
Sample Solution