Question: 1. Assume that the high costs of performing cause the promisor to breach a contract and pay perfect expectation damages to the promise. Would the promise have preferred that the promisor perform?
2. Explain the gain in total payoffs from allowing the promisor to breach and pay expectation damages when performing is inefficient.
3. Explain why compensating the victim of breach for expectation damages causes efficient performance and breach, whereas compensating the victim of breach for excessive reliance may cause inefficient performance and breach.