MANAGERIAL ECONOMICS--Show Work for Equation

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Cameron and Tyler Winklevoss were classmates of Mark Zuckerberg at Harvard University.  They and one other individual argued that Zuckerberg used many of their ideas to create Facebook in 2003.  They filed suit against Zuckerberg, but settled.  As a part of the settlement in 2008, they received $65 million in cash and some stock in Facebook. 

 

Subsequently, however, they filed suit once again, alleging that Zuckerberg had deceived them about the nature of Facebook and they should have received more.  In July 2011, this suit was dismissed by a federal court judge. 

 

            As economists view these things:

 

(a)  In their own eyes, were the Winklevoss brothers better off in 2008 when Facebook gave them $65 million in cash and stock in return for their dropping their claims?

 

(b)  In his own eyes, was Mark Zuckerberg better or worse off at the same moment in time?

 

(c)   Does the fact that Facebook now is worth about $100 billion (far more than anyone might have guessed in 2003 or 2008) change your answers to (a) and (b)?  If so, then how?

 

(d)   If it turned out that the Winklevoss brothers actually were fed false information by Zuckerberg, or that he withheld information, does that change you answer?  If so, then why?

 

 

 

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