Suppose your brother-in-law proposes that you lend him $1000 for a great investment opportunity that he has. This investment will allow him to double the money in a week, at which time he will give you your initial investment ($1000) back plus ½ the surplus ($500).

This sounds good to you but you aren't sure that such an investment exists and that there is a possibility that your brother-in-law will just take your money and keep it.


Explain and illustrate, using payoff matrices, how an enforceable contract can encourage this investment scheme to work. 

Answer rating: 100% (QA)

An enforceable contract can encourage this investment scheme to work by establishing a set ... View the full answer