Each worker can choose to work hard (H) or slack (L). Working hard costs the worker $40 per hour, and gets the work done with probability 75 percent. Slacking costs only $20 per hour but gets the work done with only probability 25 percent. The worker can quit the job and get unemployment insurance worth $10 per hour. Getting the work done gets the employer $100 per hour worth of revenue, and not getting it done gets the employer nothing. The employer tries to incentivize the worker to work hard by offering a contract with fixed payment and bonus