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Stuart_Armstrong comments on Gains from trade: Slug versus Galaxy - how much would I give up to control you? - Less Wrong
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Seems correct. But high marginal utility in strategic places can work too. What if Alice had linear utility, up until 1.05, where she suddenly has utility 2? Then the split is Alice 1.05, Bob 0.95.
Diminishing marginal returns isn't so much the issue, rather it's the low utopia point (as a consequence of diminishing marginal returns).