Charles and Monte must make a fair division of a cabin. They use the Knaster inheritance procedure. Charles bids $65,000 for the value of the cabin and Monte bids $57,000. How much value does Monte believe he ends up with?
A) $30,500
B) $4000
C) $57,000
D) $34,500

Question

Quizplus · Accepted Answer

The Knaster inheritance procedure is a method of dividing an asset between two people. The person who bids the highest amount gets the asset, but they must pay the other person half of the difference between their bid and the second-highest bid. In this case, Charles bid $65,000 and Monte bid $57,000. The difference between their bids is $8,000. Monte will get half of this, which is $4,000. So Monte believes he will end up with $57,000 (his bid) + $4,000 (half of the difference between the bids) = $61,000.

Charles and Monte Must Make a Fair Division of a Cabin