In the Above Decision Tree,Matthew Picks First and Dean Picks

question 36

Multiple Choice

In the above decision tree,Matthew picks first and Dean picks second.Matthew and Dean both know the payoffs to each choice for both themselves and each other.
-Refer to the decision tree above.Suppose Dean promises Matthew that he will always select the upper branch at either Y or Z.Dean offers to sign a legally-binding contract that penalizes him if he fails to choose the upper branch at Y or Z.For the contract to make Dean's promise credible,the value of the penalty must be

• A) any positive number.
• B) more than $1.5 million.
• C) less than $100.
• D) more than $500,000.
• E) more than $500.

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Definitions:

Wages Payable

A liability account that records the amount of unpaid wages earned by employees at the end of a reporting period.

Debit to Cash

An accounting entry that increases the cash balance in the company's ledger, reflecting an inflow of cash.

Previously Recorded

Refers to transactions or events that have been documented or accounted for in a prior accounting period.

Employee Wages

Compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.