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Ho 1 .b) Assume that prots increase with inducement. For every additional unit of inducement, prots increase by m. Assume with no inducement. the doctor
Ho 1 .b) Assume that prots increase with inducement. For every additional unit of inducement, prots increase by m. Assume with no inducement. the doctor earns TIo- Therefore. [1 = No + I'm describes how prots change with inducement. Find the doctor's optimal level of inducement. using the diagram below. Prots (IT) n=no +l'm lnducement Level Above perfect agency level
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