We will focus on Hart (1995) Chapter 2. 1. We have returned to looking at applied theory papers. Besides focusing exclusively on the mechanics of the models I also want to take a bigger picture view of how a model works. To this end, answer the following three question (which are useful for thinking about any applied theory paper). (a) What are the key assumptions of the model that drive its main results? (b) How reasonable are these assumptions? () What would happen (you guess) to the model it these assumptions are modified? Rework the model if the buyer has all the bargaining power ex post. Take one of the cases from Proposition 2 and explain what it means (if anything) for the real world. Give a real world example in which this case might apply