Describe a real-world setting in which option contracts are used ? Suppose that you work for a large corporation and that your job entails many hours of working with a computer. If you treat the computer with care, it will not break down.
But if you abuse the computer (a convenience for you), then the computer will frequently need costly service. Describe conditions under which it is best that you, rather than your employer, own the computer. Discuss verifiability and incentives in your answer.