Hippo, Lion, and Possum must decide how to split up the three bedrooms (big, medium, and small) in the house that they are renting. Hippo values the big bedroom at $700, the medium bedroom at $200, and the small bedroom at $100 Lion values the big bedroom at $500, the medium bedroom at $300, and the small bedroom at $100. Possum values the big bedroom at $300, the medium bedroom at $200, and the small bedroom at $100. The bedrooms are indivisible. No animal can use more than one bedroom. (That is, the marginal value of a second or third bedroom is $0.) Now suppose that the rent for the different bedrooms is different: the rent on the big bedroom is $500, the rent on the medium bedroom is $200, and the rent on the small bedroom is $0. Now which of the following splits is envy-free?
- None of these spilts are envy-free.
- Hippo gets the big bedroom; Lion gets the medium bedroom; Possum gets the small bedroomm
- Hippo gets the medium bedroom; Lion gets the small bedroom; Possum gets the big bedroom
- Hippo gets the small bedroom; Lion gets the big bedroom; Possum gets the medium bedroom
- All of these splits are envy-free.
