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A risk neutral worker has a reservation wage of 5 0 0 and a cost of high effort of 2 7 9 . Depending on
A risk neutral worker has a reservation wage of and a cost of high effort of Depending on the effort put by the worker and some random luck factor, the employer will earn if the worker puts high effort and he gets lucky or if the worker puts high effort and he gets unlucky OR if the worker puts low effort and he gets lucky or if the worker puts low effort and he gets unlucky Assume the worker gets lucky with probability The employer wants to incentivize the worker to put high effort and decides to pay the worker an incentive contract comprised of a fixed wage of $ plus a bonus paid only if the profit of is realized. Calculate the optimal such bonus that the employer should pay, if it wants to incentivize the worker and maximize its profits at the same time. Round your answer to decimals, if needed.
A risk neutral worker has a reservation wage of and a cost of high effort of Depending on the effort put by the worker and some random luck factor, the employer will earn if the worker puts high effort and he gets lucky or if the worker puts high effort and he gets unlucky OR if the worker puts low effort and he gets lucky or if the worker puts low effort and he gets unlucky Assume the worker gets lucky with probability The employer wants to incentivize the worker to put high effort and decides to pay the worker an incentive contract comprised of a fixed wage of $ plus a bonus paid only if the profit of is realized. Calculate the optimal such bonus that the employer should pay, if it wants to incentivize the worker and maximize its profits at the same time. Round your answer to decimals, if needed.
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