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Author Question: If a principal and agent enter into a fixed-fee contract where the agent is paid a fixed wage A) ... (Read 51 times)

jho37

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on: Jul 1, 2018
If a principal and agent enter into a fixed-fee contract where the agent is paid a fixed wage
 
  A) the principal bears all the risk.
  B) the agent bears all the risk.
  C) the principal and agent share the risk.
  D) Unable to determine with the information given.

Question 2

If a player has a dominant strategy in a simultaneous-move game, then she is sure to get her best outcome.
 
  Indicate whether the statement is true or false


joshraies

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Reply #1 on: Jul 1, 2018
Answer to Question 1

A

Answer to Question 2

False. Suppose player 1 has a dominant strategy in a two-player simultaneous move game. Then player two will choose the best response to that dominant strategy. This may not result in the highest payoff for player 1. The prisoners' dilemma is an example. All we can say for sure is that player 1 will achieve the highest payoff given the strategy of the opponent.


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