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A Pareto-Efficient Donut


In line at the Star$$ on campus, I got to chatting with Professor C just in front of me.  She ordered a latte and bought the last of the delicious Star$$ cake donuts, which I had had my eye on.  When I got to the order desk, I asked the barista (actually a male, so I guess a barister!) if he had any more in back.  Professor C offered to split the donut with me, and I said OK, but I insisted on giving her $1, my share of its cost.  She then said she prefers one-half donut to a whole donut anyway, and so do I.  She gave the barister a $1 tip.  Everyone was better off—a clear Pareto improvement compared to the situation where she got the donut, and the barister and I got nothing.