An employer {she} considers hiring an agent (he) to do some task If the agent exerts a 2 0 amount of effort, the employer gets q = e + s. where s is distributed normally with the mean 0 and variance 0'2. The timeline is as follows. The employer offers the agent a linear contract w(q) = s + bq, where s E 13 and b E 13 are chosen by the employer. If the agent rejects this contract, both him and the employer get [1. lfthe agent accepts the contract, he has to choose an effort level a 2 0. Then the production level q is realized. The employer gets q vv(q). while the agent gets u(w(q) 0(a)). CG!) 2 822 is the cost of effort and 1100 = 1'em"m with y > 0 Y . i) [A points] Give an example of a real-life situation which is described by the above model (you should indicate the interpretation of \"the employer", \"the agent\". "effort", \"production? 2) [1 point] Does the agent become more or less risk-averse when y increases? 3) [h points] Suppose the employer offered a contract w(q) = s + bq, which the agent accepted. After that the agent chose the effort level a 2 0. Write down the agent's expected utility U (s, s, b) at the time before the production level is realized. in) [3 points] Suppose the employer offered a contract w(q) = s + bq, which the agent accepted. Using the expected utility U09, 3, b). find the optimal choice of the effort level a 2 0 for the agent (ie. which agent will choose after accepting the contract)