You are thinking about renting a room in a house next year with three of your friends. For each month’s rent, you are willing to pay $530, your first friend is willing to pay $500, your second friend is willing to pay $560, and your third friend is willing to pay $560. The landlord agrees to offer each of you separate leases but will charge you all the same price: $500. You decide this is a good deal, so you and your friends move in. A couple of months later, you learn from someone who knows the landlord that he would have been willing to rent each room for $450 per month.