Question

In: Accounting

Mrs. Jones is seeking a divorce from Mr. Jones. Under the terms of her prenuptial agreement,...

Mrs. Jones is seeking a divorce from Mr. Jones. Under the terms of her prenuptial agreement, her settlement will be $100,000 if she can prove that Mr. Jones has had an affair, but $50,000 otherwise. Her lawyer, acting as her agent, can prove the affair only if he hires a private detective for $10,000, which will come out of the lawyer's fee. Mrs. Jones has the option of paying her lawyer a flat fee of $20,000 regardless of the outcome of the case or 1/3 of the settlement. The lawyer will hire the private detective only if it is profitable for him to do so.

1. Whose is the first move?

2. Draw a tree diagram for this "game in extensive form".

3. Express the strategies in normal form.

4. Which payment method will enable Mrs. Jones to win the case? (Use backward induction.)

5. Can you think of any other way (besides the flat fee and the 1/3 share) that Mrs. Jones might compensate the lawyer so as to get the best outcome for herself?

Solutions

Expert Solution

1. Mrs. jones is the first move whether to hire detective to proves affair or not.

2. image uploaded

3.Strategies in normal form:

Mrs. Jones Decides whether she go for proves to affair of mr.john or not to go for proves affair

* If She go for proves affair of mr.john so now she has to decide whether appoint detective or not.

* if she appoint detective she has to pay $10000 to detective.

* if after appointing detective proves affair so she get stellement $100000 out of which she has to choose payment method to lawyer either $20000 or $33333.

* if she appoint detective but affair not proved then she get $50000 as stellement and paid $20000 or $16667 to lawyer

*If she decided not to proves affair then she get $50000 as stellement and paid $20000 or $16667 to lawyer.

5.Yes if Mrs. john decide to pay 25000 in case of affair proved and $17000 in case of affair not proved.

In case affair proved she had to pay either $33333 or $20000 so it is better that she aggred on $25000 which is beneficail for her because it is lower that $33333 but more than 20000 so lawyer also agrred on this.

In case affair not proved she had to pay either $16667 or $20000 so it is better that she aggred on $17000 which is beneficail for her because it is more that $16667 but less than 20000 so lawyer also agrred on this.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Under the terms of a divorce agreement, Foster is to pay his wife Dorian $1,000 per...
Under the terms of a divorce agreement, Foster is to pay his wife Dorian $1,000 per month. Under the agreement, of this $1,000 per month, $200 is for child support and $800 is alimony. During the current year, Foster paid $12,000 under the agreement. The couple divorced in 2010. How much of these payments can Foster deduct for AGI (and Dorian must include in gross income)? 2. Derek and Cynthia are married and together have AGI of $100,000 in Year...
‘Mr & Mrs Jones operate a popular Hardware store in Katherine through a company called ‘Jones...
‘Mr & Mrs Jones operate a popular Hardware store in Katherine through a company called ‘Jones Hardware Pty Ltd’. Mrs Jones is a director of the company and Mr Jones is also a director and secretary of the company. Mrs Jones attends BNZ Bank which has been the company’s bank for the last 15 years. Mrs Jones completed a loan application to borrow $300,000 which states purpose the funds will be used for. In the application Mrs Jones advises that...
the Jones family household includes Mr. and Mrs. Jones, 4 children, 2 cats, and 3 dogs....
the Jones family household includes Mr. and Mrs. Jones, 4 children, 2 cats, and 3 dogs. Every dat at 6 P.M. there is a Jones family stroll. The rules for a Jones family stroll are: Exactly 5 things (people + dogs + cats) go on each stroll. Each stroll must include at least one parent and at least one pet. There can never be a dog and a cat on the same stroll unless both parents go. (a) How many...
Mr. and Mrs. Jones, both over age 65, elect joint return status. They must file a...
Mr. and Mrs. Jones, both over age 65, elect joint return status. They must file a return for 2019 if their combined gross income equals or exceeds A. $1 B. $24,400 C. $25,700 D. $27,000
1. Suppose that under the terms of an international agreement, U.S. CO2 emissions are to be...
1. Suppose that under the terms of an international agreement, U.S. CO2 emissions are to be reduced by 200 million tons and those of Brazil by 50 million tons. Here are the policy options that the United States and Brazil have to reduce their emissions: United States: Policy Options: Total Emissions Reduction: Cost: A: Efficient Machinery 60 12 B: Reforestation 40 20 C: Replace coal-fueled power plants 120 30 Brazil: A: Efficient Machinery 50 20 B: Reforestation 30 3 C:...
During all of 2019, Mr. and Mrs. Clay lived with their four children (all are under...
During all of 2019, Mr. and Mrs. Clay lived with their four children (all are under the age of 17). They provided over one-half of the support for each child. Mr. and Mrs. Clay file jointly for 2019. Neither is blind, and both are under age 65. They reported the following tax-related information for the year. Taxable Income is $114,500. Salary income 145,000 Prize from local radio station 10,500 Medical expenses (no health insurance) 4,000 Real estate taxes 8,200 Alimony...
A divorce agreement entered into in 2017 requires Alice to pay her former spouse $50,000 a year for the next ten years.
A divorce agreement entered into in 2017 requires Alice to pay her former spouse $50,000 a year for the next ten years. Will the payments qualify as alimony? Why or why not?    
Mrs. J is in a car accident and her right leg is pinned under the crushed...
Mrs. J is in a car accident and her right leg is pinned under the crushed dashboard of her car. She is very scared and although she is in pain her endogenous pain suppression system is keeping it manageable. She is finally extracted from her car by emergency services and although she is relieved to be free from her car, the pain from her leg intensifies. The emergency personnel start her on a morphine drip (an exogenous pain medication) and...
Mrs. J is in a car accident and her right leg is pinned under the crushed...
Mrs. J is in a car accident and her right leg is pinned under the crushed dashboard of her car. She is very scared and although she is in pain her endogenous pain suppression system is keeping it manageable. She is finally extracted from her car by emergency services and although she is relieved to be free from her car, the pain from her leg intensifies. The emergency personnel start her on a morphine drip (an exogenous pain medication) and...
Mr. Jones is waiting to make a phone call from a public phone at a train...
Mr. Jones is waiting to make a phone call from a public phone at a train station. There are two public telephone booths next to each other, occupied by two persons, say A and B. If the duration of each phone call is an exponential random variable with λ = 1/6, what is the probability that among Mr. Jones, A, and B, Mr. Jones will not be the last to finish his call
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT