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6. Individual Problems 19-6 You need to hire some newI employees to staFi your slartup 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 slartup venture. You know that potential employees are distributed throughout the population as Follows. but you can't distinguish among them: Employee Value Probability 540,000 0. 12 5 $45,000 D. 12 5 550,000 El. 12 5 $55,000 D. 12 5 560,000 0. 12 5 $55,000 0. 12 5 530,000 0. 12 5 $35,000 D. 12 5 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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