Determine its transition probability matrix, and draw the state diagram. Obtain the steady state probability vector, if it exists. From my understanding, there are 3 possible states of the system: All 2 components are working fine; One component has failed and one is working fine; Both components are in the failed state These equilibria are known to be suboptimal. We show that, for any such equilibrium allocation, there always exists a Pareto optimal improvement which has the additional property of reaching the Golden Rule in finite time, Le., the monetary steady state acts as a target. We also show that, in general, periodic allocations cannot be used as targets.