Problem 5: Contracting and Buying Information/Transparency Consider a setting of complete contracting in a discretionary environment, where the court will impose transfers as specified by the players. For each of the following two underlying games, how much should the players be jointly willing to pay to transform the setting from one of limited verifiability, where the court cannot distinguish between (I, N), (N, 1), and (N, N) but knows whether (1, 1) was played, to one of full verifiabililty, where the court knows exactly what the players did? To answer this question, you must determine the outcomes in the two different information settings. Show your work and explain separately for each of the following games: I N I N 5 6 7 8 I I 5 -5 4 -4 -4 0 -2 0 N N 8 0 2 0 A B Problem 6: Contracting and Principal-Agent Games Suppose a manager (Player 1) and a worker (Player 2) have a contractual relationship with the following technology of interaction. Simultaneously and independently, the two parties each select either low (L) or high (H) effort. A party that selects high effort suffers a disutility. The worker's disutility of high effort (measured in dollars) is 2, whereas the manager's disutility of high effort is 3. The effort choices yield revenue to the manager, as follows: If both choose L, then the revenue is zero. If one party