"> (Answered) A financial intermediary is hired to make a transaction "go forward". The intermediary can do a good job that costs the intermediary \$400,... - Tutorials Prime

## (Answered) A financial intermediary is hired to make a transaction "go forward". The intermediary can do a good job that costs the intermediary \$400,...

A financial intermediary is hired to make a transaction "go forward". The intermediary can do a good job that costs the intermediary \$400,...

AÂ financial intermediary is hired to make a transaction "go forward".Â The intermediary can do a good job that costs the intermediary \$400, or do a bad job that costs zero.Â If the intermediary does a good job the transaction will go forward.Â If the intermediary does a bad job the transaction will go forward with probability 0.75, and will fail with probability 0.25.Â The customer can't observe the intermediary's job choice and simply pays the intermediary \$X if the transaction goes forward and pays \$0 if it fails.Â What is the minimum X the customer must pay in order to persuade the intermediary to have done good job?X = \$1,000X = \$1,200X = \$1,600X = \$2,000

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This question was answered on: Jan 02, 2020

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