Individual Problems 19-6 You need to hire some new employees to staff your startup venture. You know that potential employees are distributed throughout the population as follows, but you can't distinguish among them:

Employee Value Probability

$50,000 0.25

$69,000 0.25

$88,000 0.25

$107,000 0.25

The expected value of hiring one employee is $ ____________.

Suppose you set the salary of the position equal to the expected value of an employee. Assume that employees will not work for a salary below their employee value.

The expected value of an employee who would apply for the position, at this salary, is $__________ .

Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is________

$50,000

$107,000

$88,000

$69,000 .