Fair Shares The Center City Anuraphilic Frog Lovers Society
Fair Sharesthe Center City Anuraphilic Frog Lovers Society Has Falle
Fair Shares The Center City Anuraphilic (frog lovers) society has fallen on hard times. Abraham, Bobby, and Charlene are the only remaining members, and each feels equally entitled to take possession of the society’s collection of live rare tropical frogs. The decision is made to use the method of sealed bids and fair shares to decide who will take possession of the entire collection and how much will be paid in compensation to the other members. Abraham unseals his estimate of the value of the collection at $12,000.00. Bobby’s estimate of the value of the collection is $6,000.00. Charlene values the collection at $9,000.00. Who receives the collection of frogs? What is each person’s fair share of the monetary value of the collection? Why is the monetary amount of each fair share different? How much money is owed to each of the two people who do not “win” the collection of frogs? In your opinion, how “Fair” is the process described above? Now pretending for a moment that you like frogs, we will insert you into the situation under special circumstances. Despite (or perhaps because of) your love of all things amphibious, you currently lack the funds to pay each of the others their probable fair share. You will not receive the collection, but wish to receive as much money as possible. You have no knowledge of the amounts in each of the sealed bids but strongly suspect that Abraham will bid between $10,000.00 and $12,000.00. Given that you cannot afford to “win” the process, describe how you will go about deciding what to put down for your own estimate of the collection’s value. Comment on your peers' responses, addressing the following: Do your peers' responses address all of the points of the assignment? Are the answers and the reasoning behind those answers clear?
Paper For Above instruction
The scenario described involves a division problem using the method of sealed bids and fair shares, a classic approach in cooperative bargaining and dispute resolution. This method aims to create a fair process by dividing the total value of a resource among parties based on their individual valuations, subsequently determining who gains possession and how much compensation they owe each other. The fairness and effectiveness of this process hinge on accurate valuation, transparency, and perceptions of fairness among participants.
Determining the Recipient of the Frogs
Initially, the decision on who should receive the collection is based on the sealed bids and the concept of fair shares. The highest bid among Abraham’s $12,000, Bobby’s $6,000, and Charlene’s $9,000 indicates that Abraham values the frogs the most and thus, under the common practice of sealed bid negotiations, would be the likely recipient. Since Abraham’s bid exceeds the estimated value of the collection by a significant margin, it suggests he is willing to pay more, and as such, he is the most probable recipient if he wins the auction.
Calculating Fair Shares
Fair shares are computed as the parties’ proportional contributions to the total valuation. The total valuation, based on the bids, can be considered as the sum of individual valuations: $12,000 + $6,000 + $9,000 = $27,000. The fair share for each member is a proportion of this total, reflecting their individual valuation relative to the total.
- Abraham’s fair share: ($12,000 / $27,000) × total value (which can be considered as the highest bid or the total valuation estimate).
- Bobby’s fair share: ($6,000 / $27,000) × total valuation.
- Charlene’s fair share: ($9,000 / $27,000) × total valuation.
Assuming the total is valued at $12,000, Abraham’s fair share would be approximately $5,333; Bobby’s around $2,222; and Charlene’s about $4,444. These are the amounts they should be compensated if the collection is awarded to the highest bidder, and fairness would be assessed based on whether the final payment reflects these proportions.
Why Are Fair Shares Different?
The differences in fair share amounts stem from the varying valuations each member assigns to the collection. Everyone perceives the value differently based on personal preferences, environmental significance, or emotional attachment. The fairness principle is that each person should receive compensation proportional to their valuation, ensuring that no one incurs a disproportionate loss or gain, which maintains fairness in cooperative sharing of potentially valued resources.
Compensation for Non-Winners
Those who do not win the collection are entitled to compensation in the form of monetary payment reflecting their fair share. For example, if Abraham wins the collection, Bobby and Charlene are owed their fair shares as compensation. Conversely, if Charlene or Bobby wins, Abraham's and the other’s fair shares are owed to the winner. The amounts owed depend on the difference between their bids and fair shares and the amount they paid for the collection.
Assessment of Fairness of the Process
While this method seeks fairness by basing the division on individual valuations and proportional compensation, it is inherently imperfect. Discrepancies in valuation can lead to disagreements about what constitutes fair compensation, especially when bids diverge significantly, as in Abraham’s $12,000 bid versus Bobby’s $6,000. Moreover, strategic bidding behaviors—such as overbidding or underbidding—can distort the fairness of the process. Nonetheless, the sealed bid method attempts to balance the interests of all parties while incentivizing honest valuation, though it relies heavily on truthful bidding.
Deciding Hidden Valuations Under Constraints
In the hypothetical scenario where I love frogs but lack the funds to win, I must estimate my bid without knowing others' bids. Given strong suspicion that Abraham’s bid is between $10,000 and $12,000, I need to set my bid strategically low to avoid winning but high enough to secure the best possible monetary return. Since I cannot outbid Abraham, I would bid slightly less than his expected lower bound, say around $9,500, to remain a non-winner but maximize potential monetary gain if the other bids are lower than my estimation.
This decision involves assessing the probability distribution of bids based on available information and my valuation of the frogs’ worth. I must also consider my utility—since I cannot afford to win, my goal is to get as much monetary compensation as possible without risking winning the collection. Therefore, I would bid just below my maximum acceptable bid, ensuring I remain a non-winner, and hope the others bid accordingly.
Commentary on Peer Responses
Effective responses should address all facets of this complex problem, including the recipient determination, fair share calculations, the reasons behind share disparities, and strategic bidding decisions. Clear reasoning, supported by relevant economic and negotiation theories, is critical. It is similarly important for responses to acknowledge the limitations of the fair shares method and strategic considerations in sealed bid negotiations. Engaging critically with peers’ approaches fosters a deeper understanding of fairness and strategic behavior in cooperative bargaining scenarios.
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