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RE: L&E: expectation damages-slide 70

by Kirstein on 12 Jun. 2008 19:18 Hi, first of all, 230 is correct, sorry for the typo and thanks for the hint. Second, you remark concerns the difference between ex-ante and ex-post efficiency. If one acknowledges that B‘s inefficient investment has already been made (the event is "sunk"), then your argument is right: from this point on, it would be efficient to deliver to B whenever vT is smaller than 230. From an ex-ante point of view, we would like to implement i=10 and delivery to T whenever vT is greater than 200. That this occurs with probability 1/3 contributes, by the way, to the reason why i=10 is dubbed efficient. Thirdly, what goes wrong with Germany? (Written in the 62nd minute). Still hoping the best RK Web search, Forum search for L&E expectation damages slide