A. Now consider Pauls incentives to shirk in his job at SuperKleen. If he shirks in any given year, he experiences a gain in on-the-job leisure that year that is worth 50 to him. In that event, he is detected with probability p=.25 (set up your spreadsheet so you can input alternative values of p, and of the value of the extra leisure he gets from shirking). If he is detected, Paul is fired and takes his next best alternative (which is either the alternative job or leisure, i.e. early retirement, whichever is higher) for the rest of his career. So, overall, Pauls net gain to cheating consists of:

- The extra on-the-job leisure of 50

- A (1-p) chance of losing nothing

- A p chance of the difference between his remaining present value of wages at SuperKleen and the remaining present value of his next best alternative to working at SuperKleen.

In your spreadsheet, calculate Pauls net gain to shirking in each year of his career under wage profile A, and under wage profile B.

B. What are Pauls net gains from shirking in his 17th year at SuperKleen under wage profile A? Under profile B? Overall, which profile gives him the greater incentive to shirk? Comment on which stages of his work life where Paul is most tempted to shirk under each profile, and explain.