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1. The technology of interaction for a contractual relationship is given by the matrix below. 2 H L H 5,5 0,8 L 7,0 1, 1

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1. The technology of interaction for a contractual relationship is given by the matrix below. 2 H L H 5,5 0,8 L 7,0 1, 1 Suppose the players can obtain externally enforced transfers, which must be "bal- anced," by writing a contract. Under the assumption that the court can verify exactly the outcome of production, what value can the players obtain and what contract is written? Describe both the externally and self-enforced components

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