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Suppose there are two types of workers A and B. Productivity of Type A workers is $0 and productivity of Type B workers is $500.
Suppose there are two types of workers A and B. Productivity of Type A workers is $0 and productivity of Type B workers is $500. There are two periods, and no discounting. You will know true productivity only after the first period. Your goal is to attract only the Type B workers through a probationary wage scheme. What wages should you offer?
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