ECONOMIC PRINCIPLES
and B not willing to accept apples at any rate exceeding
seven plums for an apple. Agreeing to exchange at six
to one, two more apples are exchanged, and then neither
is willing to exchange more at any rate which the other
will accept.
The results of the two series of bargains differ, and the
difference is due to the different rate established at the
opening, itself due to the differences in bargaining capacity,
which, in the first case, was supposed to give the advantage
to B, in the second to A. This advantage is a relative
advantage, meaning that the actual exchange approaches
more closely to the limit beyond which one will not go
than to the corresponding limit of the other. The bargainer
who only gets nearly the least he would accept is the one
who gets least relative advantage. Thus, when A would
take anything beyond a two to one rate, B would yield
anything not exceeding twelve to one. A five to one rate
favours B more than A, a twenty-five to three rate favours
A more than B.
There is some one rate which differs from all others, in
the fact that, when all exchanges have been made which
both bargainers are willing to make at that rate, there is
no other rate at which they are willing to make any further
exchanges. If they can hit on this rate at the outset, it
will be the rate which holds till they cease exchanges.
Thus, if an initial rate of seven to one had been established,
it is possible that five apples would be exchanged at this
rate, and that, then, A would want more than seven plums
for another apple, while B would not give as many as seven
plums for another apple.
There is a definiteness and finality about this rate which
does not belong to any such tentative rates as may by
chance be established in the way suggested above. So
long as there are but two individuals concerned in the
bargaining, and attention is paid to the momentary craving
of each for a share of the goods possessed by the other, such
rates are liable to be established. The more carefully the
whole situation is weighed, the more complete the knowledge
sach possesses of the disposition and resources of the other

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