Joe wants to achieve the highest position possible with the XYZ Co During the interview, he tells them he is capable of performing many difficult tasks. The company feels there is an 10% chance he is lying
Given the payoff matrix in the above figure, what job level will the company offer to Joe? Why?
The expected payoff to the firm of giving Joe a demanding job is (0.9 ? 2 ) + (0.1 ? 1 ) = 1.9. The expected payoff to the firm of giving Joe an undemanding job is (0.9 ? 1 ) + (0.1 ? 4 ) = 1.3. The firm's expected payoff is greater if Joe has a demanding job. Even though Joe's interests diverge from the company's and he has the incentive to claim high ability regardless of whether it is true, the firm feels there is a very high probability that Joe does have high ability and therefore offers a demanding job.
You might also like to view...
What is the objective of environmental accounting? Are a country's national accounts likely to show more or less income than with traditional GDP?
What will be an ideal response?
Higher production indifference curves correspond to larger amounts of one input in relation to a second input.
Answer the following statement true (T) or false (F)
Because of college financial aid packages, the cost of college is highest for ______.
a. the poor b. most of the middle class c. the rich d. first generation students
A firm stands to lose by operating instead of shutting down if ________ does not sufficiently cover ________.
A. total revenue; total costs B. price; average fixed cost C. operating profit; economic profit D. price; average variable cost