3. You wish to hire Ricky to manage your Dallas operations. The profits from the operations depend partially on how hard Ricky works, as follows.

If Ricky is lazy, he will surf the Internet all day, and he views this as a zero cost opportunity. However, Ricky would view working hard as a “personal cost” valued at . What fixed percentage of the profits should you offer Ricky? Assume Ricky cares only about his expected payment less any “personal cost.”