Sam Is Suing Someone in Court for $10,000

question 79

Essay

Sam is suing someone in court for $10,000.The probability that Sam will lose the case is 1/h where h is the number of hours that Sam's attorney works on the case.The lawyer charges $500 per hour if he is to be paid hourly,or he requests 20% of the settlement if he is to be paid on a contingency basis.Assuming both Sam and the attorney are risk-neutral wealth maximizers,is either contract efficient?

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Definitions:

Hot Climates

Refers to regions of the world characterized by high temperatures for most of the year.

Colder Climates

Regions with lower average temperatures, often characterized by longer winters and shorter summers, affecting living conditions and lifestyle.

Basal Metabolic Rate

The pace at which energy is consumed by the body in a resting state to support crucial processes such as respiration and maintaining body heat.

Energy Expenditure

The total amount of energy used by the body, encompassing basal metabolic rate, physical activity, and energy used in digestion and absorption of food.