Question: Suppose in Example 9 2 that net income turns out to

Suppose in Example 9.2 that net income turns out to be $ 25, despite the assumption that net income can only be one of $ 115 or $ 40. How could this happen, and what does it say about the completeness of the compensation contract in the example? How might the manager react to this lower net income number?




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  • CreatedSeptember 09, 2014
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