a. A TV station wants a documentary about the Australian outback. A freelance reporter is interested and the two parties negotiate. The trip to Australia, the equipment and everything else necessary for the documentary would cost £10,000, which the reporter would have to pay herself. The TV station offers to pay £25,000 for the documentary later. If the reporter does not sell the documentary to the TV station, she could put it on her own Youtube – Channel and earn £8,000 revenue this way. Assume no binding contract can be written. Will the reporter produce the documentary? Explain your answer.
b. What is a problem such as in a) called? What is the economic “loss” that it causes?
c. What could the TV station do in order to make the documentary happen (other than writing a binding contract)?
d. Give two other examples of how this type of problem can be solved generally. Briefly explain your examples.