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Problem 1.1 A firm wants to hire a worker, who is risk neutral. With respect to effort disutility, the worker could be either of two

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Problem 1.1 A firm wants to hire a worker, who is risk neutral. With respect to effort disutility, the worker could be either of two types. His disutility for exerting effort e > 0 is either 1/2e2 ("good" type G) or e? ("bad" type B). The probability that the worker is of type G is denoted q, 0

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