You are running a business and try to hire another worker. Two people applied for the position, Dong and Beom. Dong is productive, he would increase your revenue by $50 while his opportunity cost for taking this position is $40 with other outside options. Beom is lazy, he would increase your revenue only by $25, and his opportunity cost is $20. Although the applicants know their own types, you do not know who's productive and who's lazy.

(a) Not knowing the exact type, suppose you decide to pay the expected value of your revenue. What will happen in this case? Is this a good idea?

(b) If you DO know whether a worker is productive or not, which one would you prefer to hire and why? Based on the information given above, is there a way to devise a compensation scheme to guarantee that you only attract the type you prefer?