When a Contract Exists and a Principal Agrees to Certain

question 42

Multiple Choice

When a contract exists and a principal agrees to certain conditions, but fails to perform, which of the following may the agent seek in order to force the principal to perform the contract as stipulated?

• A) Specific performance
• B) Specific recoupment
• C) Adequate performance
• D) Reformation
• E) None of these

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Definitions:

Separating Equilibrium

A situation in a game or market where different types of participants (e.g., buyers and sellers) are sorted into different outcomes based on their types or actions.

Agents

Entities or individuals that act on behalf of others in economic models, making decisions and taking actions to achieve desired outcomes.

Marginal Products

The additional output that results from the use of an additional unit of a productive input, holding other inputs constant.

Pooling Equilibrium

A situation in a signaling game where different types cannot be distinguished by the actions they take, leading everyone to pool together and behave identically.