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A principal is considering hiring a lawyer to represent him or her in a lawsuit. The principal gets $250.000 it the suit is won and
A principal is considering hiring a lawyer to represent him or her in a lawsuit. The principal gets $250.000 it the suit is won and $0 otherwise. If the agent works hard (100 hours), there is a 50% chance that the principal will win the suit. If the agent does not work hard (10 hours), there is a15% chance that principal will win the suit. Without a lawyer, the principal is sure to lose the suit. The principal can monitor the agent, and both parties are risk neutral. The agent's utility function is m-50e, where "m" is money in dollars and "e" is effort in hours. The agent's fee for this case is $100 per hour, and the outside opportunity is worth $500, Write down the game in extensive form (Tree form) and solve it
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