Problemsuppose you hire a real estate agent and tell him to, Ask an Expert

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Problem:

Suppose you hire a real estate agent and tell him to sell your house to the highest bidder. You pay the real estate agent a flat fee of $50,000 when the house is sold. You learn that, unfortunately, the agent sells the house to the first bidder at a low price.

Required:

Question 1: What is this type of problem called?

Question 2: What is one way to change the real estate agent's incentive so he does sell to the highest bidder, instead of the first one?

Note: Show all workings.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148931

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