Question

Two roommates are opposites. One enjoys playing Modern Warfare with his friends all night. The other likes to get to bed early for a full 8 hours of sleep. The roommate who plays Modern Warfare values gaming more than his roommate values his sleep. According to the Coase theorem,

Answer 1

Answer:

the person who plays Modern Warfare will compensate his roommate for loss of sleep.

Explanation:

Coase theorem states that both parties want to maximize their efficiency and benefits but opposing behavior  may arise conflict between two parties. Like in this example both one want to maximize his fun and benefit through playing and other one want to maximize his benefit through sleeping. So to maintain overall efficiency the roommate who is playing games have to give some compensation to other roommate for overall maximization.