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6. Individual Problems 19-6 You need to hire some newI employees to staFi your s|artup venture. You know that potential employees are distributed throughout the
6. Individual Problems 19-6 You need to hire some newI employees to staFi your s|artup venture. You know that potential employees are distributed throughout the population as Follows, but you can't distinguish among them: Employee Value Probability 545.000 0.1 $50,000 0.1 511,000 0.1 $04,000 0.1 597,000 0.1 $110,000 0.1 $123,000 0.1 $136,000 0.1 $149,000 0.1 $152,000 0.1 The expected value of hiring one employee is . Suppose you set the salary of the position equal to the expected value of an employee. Assume that employees will not work For a salary belowI their employee value. The expected value of an employee who would apply for the position, at this salary. is . Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is V
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