How predictable the value of the sunken treasure is

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Reference no: EM131409747

Padma has the rights to any treasure on the sunken ship the Golden Calf. Aaron is a diver who specializes in marine salvage. If Padma is risk averse and Aaron is risk neutral, does paying Aaron a fixed fee result in efficiency in risk bearing and production? Does your answer turn on how predictable the value of the sunken treasure is? Would another compensation scheme be more efficient?

Reference no: EM131409747

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