Question: In the duck-carving example with limited information (summarized in the third and fourth columns of Table 19.1), is a fixed-fee contract efficient? If so, why?

In the duck-carving example with limited information (summarized in the third and fourth columns of Table 19.1), is a fixed-fee contract efficient? If so, why? If not, are there additional steps that Paula can take to ensure efficiency?
Table 19.1: Production Efficiency and Moral Hazard Problems for Buy-A-Duck

Full Information Asymmetric Information Production Production Moral Hazard Contract Efficiency Efficiency Problem Fixed-fee rental contract Rent (to principal) Yes Yes No Hire contract, per unit pay Pay equals marginal cost No Nob Yes Pay is greater than marginal cost No No Yes Contingent contract Share revenue No Yes Nob Share profit Yes Nob Yes

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