the question gives the utility of two agents and their endow
the question gives the utility of two agents and their endowments and asks for the pareto efficient allocation. i tried to solve using the lagrangian. and just find that x2 of agent 1 is 81.9 or 122.1 and nothing about agent 2.
how can i solve the problem?
Solution
You can find the solution to agent 2 by maximizing the utility unction of agent 2 subject to utility function of agent 1.
Solve in the same manner just maximize u2 now. You will get a value for agent 2.
