A deadweight loss occurs when both sides are worse off because the contract is not enforced.

A model sends her headshots to the top agency in Paris. The agency tells her they have a lot of files to review and asks her not to send them to any other agency for one month. The model sends them to another agency, which says it will sign her, for a much smaller fee than the first agency would have, as they have a little bit of work for her. It turns out the first agency was looking for just this type of model and would have hired her and made her start with a lot of money. How could the first agency have prevented a deadweight loss?

A. There was not a deadweight loss because the model was signed by the second agency.

B. The first agency could have specified that the model had to leave the file exclusively.

C. The first agency could have promised to consider the file.

D. The first agency could have taken the model to dinner.

E. Both C and D are correct.