In Chapter 5 of Managerial Economics, Froeb discusses post-investment holdup as a sunk cost problem associated with contract-specific fixed investments. The modern theory of contracts is sometimes called the theory of joining wills, which simply means when parties make an agreement they are joining together to complete an endeavor of mutual interest. The problem with all contracts that endure over time is that not all potential challenges can be anticipated. The idea of joining wills is that parties will attempt to seek accommodations to advance their mutual interest, so long as the return on the invested activity pays off. Froeb illustrates the idea by the example of marriage as a contract.
Also see the help provided in the discussion preparation.
Instructions
Review the three scenarios below. Look for which, if any, of these scenarios presents an example of post-investment holdup.
Your firm conducted a search for a new chief financial officer and hired a highly qualified candidate with a yearly salary of $250,000. After six months, the person left to join another firm.
Your firm has an exclusive contract to assemble automobile seats for a number of luxury models. Almost 100% of the materials are imported and, of those, over 50% include parts manufactured in China. All of the prices on the parts from China increased by 25% when the United States imposed tariffs on China. Your company has informed all of its customers that increased cost must be passed on for your firm to continue supplying the seats. All of your customers reluctantly agreed to pay the additional cost.
Your company took note of your progress toward your MBA, and when the director for customer services left the company, you were asked to take over as interim director. You were encouraged to apply for the full-time position once you got your MBA. You served for 13 months, at which time your company was acquired by another company and your position was abolished.
In your discussion post, address the following:
Introduce yourself to your peers by sharing something unique about your background. Explain how you expect this course will help you move forward in your current or future career.
Identify which of the above scenarios, if any, are an example of post-investment holdup.
Choose one of the scenarios above. Define the following and explain each within the context of the chosen scenario:
What is the sunk, or stranded, cost?
What is the contract?
Was the contract breached?
What are the damages?
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Reflect on your experiences as an educator and your experiences in the program (coursework, field experiences, and internships). Analyze a school’s mission and vision statements to reflect on how these statements align with each other. How are these two statements related? Is there explicit alignment? Reflect on the values highlighted by these statements and determine if they are aligned with issues of social justice and equity in an educational setting (CAEP). Determine where and how the contradictions between stated mission and vision and actual practices in the school are evident.
In essence: What is and what should be?
Define the Problem: Use the chart to brainstorm possible areas of misalignment between the school vision and mission and the reality of the school site based on your reflections.
Write a reflection on your selection of the problem discussing how it relates to issues of equity and social justice. Include background information explaining why you have chosen this area (only one is required) of focus. Submit to your faculty mentor for approval.
Examine various scholarly sources to familiarize yourself with the relevant research related to the problem or issue you have defined as it relates to social justice and equity Identify relevant research sources that clarify further and support the selection of your problem.
• Select three to five peer-reviewed scholarly sources of literature to identify the current state of scholarship on your topic
• Compare different material highlighting similarities, differences and connection
Based on your reading of the peer reviewed sources, provide a synthesis of the issues, trends, and concepts in a 2-3-page report. Make sure to analyze what the literature says about the problem and how it relates to equity and social justice. Include a reference list, in APA format, of all the resources examined in the research of the literature.
 
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