Is the incumbent ever in control of this game?

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There are 5 parts, each part should be answered with one (1) along with one (1) source/link to go along with it. Total of 5 paragraphs and 5 links. Make sure each paragraph is grouped/followed with a link, so I know which goes in which order.
PART 1 (1 PARAGRAPH AND 1 SOURCE/LINK) – In your Managerial Economics textbook, we consider a sequential-move game in which an entrant is considering entering an industry in competition with an incumbent firm (see Figure 15-1). There are several possibilities of how this sequential game will be played. We want to use the Froeb rule of “look ahead and reason back.”
Assignment: For your discussion post, use Figure 15-1 from the textbook as your starting point to address the following: Can, and how does, the entrant succeed? Is the incumbent ever in control of this game? You may wish to review the old game known as Duopoly, as well as Antoine-Augustin Cournot, to help inform your post. Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.
PART 2 (1 PARAGRAPH AND 1 SOURCE/LINK) – Asymmetric information and/or imperfect information can cause two forms of market failure:1) Adverse selection and 2) Moral Hazard. Asymmetric information is where one party in the transaction has more information that the other party in the transaction. Imperfect information is a situation where neither party has perfect information about the good/service being exchanged in a transaction. Such goods and services are sometimes referred to as experience goods. In the late 1990s, car leasing was very popular in the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the car. If the customer decided to keep the car, the customer would pay a price to the manufacturer, the “residual value,” computed as 60% of the new car price. The manufacturer would then sell the returned cars at auction. In 1999, the manufacturer lost an average of $480 on each returned car (the auction price was, on average, $480 less than the residual value).
Assignment: Why was the manufacturer losing money on this program? Was this a problem of adverse selection or moral hazard? What should the manufacturer do to stop losing money? Will rational actors use rule of thumb? You will find help has been provided in the discussion preparation. Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.
PART 3 (1 PARAGRAPH AND 1 SOURCE/LINK) – For this discussion, your focus will be to think through what asymmetric information, moral hazard, and adverse selection have to do with corporate hiring staff accountants. As we saw in the week 7 discussion in contracts there may be something called the agency problem. In employment contracts we have a principal, the organization hiring, and the agent, the potential employee. When hired, the employee is expected to carry out/act on behalf of the agent’s best interest. It can be very hard and costly for the principal to ensure that the agent is conducting the principal business in the best interest of the principal. Consider the following policy: Many corporations require all staff accountants to hold not only a degree in accounting but also to have a CPA license. There is a substantial higher cost to hiring CPAs.
Assignment: In your discussion post, address the following: Speculate on why corporations do not lower their explicit payroll cost by hiring accountants without a CPA. Consider how asymmetric information, moral hazard, and adverse selection may affect the perception of risk? You will find help has been provided in the discussion preparation. Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.
PART 4 (1 PARAGRAPH AND 1 SOURCE/LINK) – This week as in week 7 and 8 we are again dealing with the challenges presented by employment contracts and the agency problem. In 2016 knowledge of fraud over sale practices in the consumer banking division became widely known. Even with 3 changes in CEOs and multiple efforts to improve governance, Wells Fargo is facing another scandal in 2022, “Wells Fargo Gamed the System in Investor Arbitration, Judge Says,” WSJ 2/4/22. By selecting arbitrators pre-disposed to the corporation, Wells Fargo managed to short-change the investors who had already suffered major losses due the fraud. On September 13, 2021, Senator Elizabeth Warren sent FED Chair Jerome Powell a letter https://www.warren.senate.gov/imo/media/doc/Letter%20from%20Senator%20Warren%20to%20Fed%20on%20Wells%20Fargo%20FHC%20Status%2009.13.2021.pdf In the letter she wrote “Under Janet Yellen’s leadership, the Fed placed Wells Fargo under an asset cap in 2018 due to its widespread consumer abuses and other compliance breakdowns. In the three years since then, numerous additional revelations have surfaced about Wells Fargo’s continued unethical and anti-consumer conduct. These new revelations have once again made clear that continuing to allow this giant bank with a broken culture to conduct business in its correct form poses substantial risks to consumers and the financial system” Senator Warren goes on to ask that the FED revoke Wells Fargo’s status as a financial holding company. The action would require Wells Fargo to separate its consumer bank subsidiary from its other financial activities. Wells Fargo is an enormous financial services company with $1.9 trillion in assets. It serves 1 in 3 US households and 10% of US small businesses. In reply to Senator Warren’s demand Well Fargo replied,https://newsroom.wf.com/English/news-releases/news-release-details/2021/Wells-Fargo-Affirms-Focus-on-Building-Strong-Risk-and-Control-Foundation/default.aspx In its reply it cites progress achieve under the new CEO Charles Scharf, including: 1) three business group have been split into five; 2) it has created four new functions to provide greater oversight and transparency; 3) it has brought on board 10 new Operating Committee members out of the total committee of 17; 4) created a new team design to facilitate oversight of consumer practices; 5) created new enterprise wide risk assessment with the intent to design new controls; 6) “Implemented a new incentive plan for bank branches that is governed by stronger oversight and controls, and focused on customer relationships.” Emphasis added by Dr. Isley.
Assignment: The FED continues to maintain that Wells Fargo has not done enough to rein in the incentive failures that revealed the frailty of its corporate governance. We have seen that several of the largest conglomerates in the US decide that it is time to divide their agglomerated groups into smaller units for focus and function. J & J will separate its consumer products division and its pharmaceutical division. GE will divide into three units; aviation; energy, and healthcare. Is it time for Wells Fargo to separate its consumer banking business from its other enterprises? YES/NO Explain
What is the principal-agent problem?
What is the role of corporate governance?
How is corporate culture different than governance?
Can incentive systems align culture with governance?
How might separating Wells Fargo’s consumer banking business from its other enterprises improve depositor safety?
You will find help has been provided in the discussion preparation. Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.
PART 5 (1 PARAGRAPH AND 1 SOURCE/LINK) – This week’s discussion will provide you with an opportunity to apply Froeb’s analytic method. Read the example in the discussion instructions while keeping in mind the following questions:
Who made the bad decision?
What information did they have? And was it good, bad, or unclear?
What was their incentive?
Assignment: Read the following and then respond to the discussion prompt. Intel made large loyalty payments to HP in exchange for HP buying most of their chips from Intel instead of rival AMD. AMD sued Intel under the antitrust laws, and Intel settled the case by paying $1.25 billion to AMD. Address the following in your discussion post: What incentive conflict was being controlled by these loyalty payments? What advice did Intel ignore when they adopted this practice (consider how the Robinson-Patman Act applies to their practice) and speculate why Intel ignored the advice. Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.

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