The bonding critique criticizes the model of efficiency wages because
A. workers do not know how well the firm can monitor worker effort.
B. firms cannot issue bonds to pay for labor costs.
C. profit-maximizing firms should never be willing to pay more than the competitive wage.
D. worker effort is unrelated to wages.
E. workers should be willing to give the firm collateral that the firm would keep if the firm ever caught the worker shirking, and in exchange the worker would be willing to work for a wage less than the efficiency wage.
Answer: E
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