Exhibit 15A-1
Suppose GM and Nucor Steel Seek to Develop $\textbf{ Part C: }$

question 7

Essay

Exhibit 15A-1
Suppose GM and Nucor Steel seek to develop jointly a new sheet metal and auto body stamping machine,and each party knows the payoffs in the following table of equi-probable outcomes but cannot independently verify one another's costs.Both GM and Nucor can cancel the project and both will then earn $0 if the cost revelations give early warning of losses.

Note: The figures in parentheses represent costs associated with the Low and High cost realizations,and all figures are in millions.The joint profit payoffs are the difference between $180 and the sum of the cost realizations.
-Refer to Exhibit 15A-1.
$\textbf{ Part C: }$ What is the expected net profit under the simple profit sharing contract,and why would the partners adopt an incentive-compatible revelation mechanism (i.e. ,an optimal incentives contract)?

---

Definitions:

Phoenix Payroll System

A specific payroll processing software used by the Canadian government, noted for its significant implementation problems.

Structured Problem

A problem with clear, definable solutions and methodologies for solving, often with specific desired outcomes.

Unstructured Problem

A problem characterized by uncertainty and complexity, lacking a clear, fixed, or predefined solution path.

Ill-structured Problem

A type of problem that is complex and ambiguous, with no clear goal or well-defined solution paths.