Expected payoff of shirker or a hard worker


Question:

Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker. Suppose working hard raises the probability of making a sale from 40% to 80% (thus raises the probability of making a commission C by the same percentage). If the cost of working harder is $150, what commission C should you offer the worker to provide an incentive to work hard.

Solution Preview :

Prepared by a verified Expert
Microeconomics: Expected payoff of shirker or a hard worker
Reference No:- TGS02091978

Now Priced at $20 (50% Discount)

Recommended (96%)

Rated (4.8/5)