Suppose employees pay a bond of $1,000 to an employer. The gain from shirking is $400. Monitoring devices have been installed so that there is a 50% chance of being caught if you are shirking. The company is considering the installation of additional monitoring devices to increase the chance of catching a shirker to 100%. They feel this is needed to deter all shirking. What is your recommendation
to the company? Explain.
What will be an ideal response?
Shirking is already deterred; the company does not need any more monitoring devices. The employee gains $400 by shirking but has an expected loss of $500 (loses $1,000 with 50% probability).
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Consider an economy over the years 2008 and 2009. The output in the economy has remained constant over the two years but the prices of all goods and services have halved. In such a situation,
A) the real GDP of the economy stays the same over the two years. B) the nominal GDP of the economy remains the same over the two years. C) the real GDP of the economy increases over the two years. D) the nominal GDP of the economy increases over the two years.
A mixed strategy in which positive probability is placed on more than one action can be a best response to another player's strategy only if the expected payoff from playing the pure strategies (over which the individual is mixing) is the same.
Answer the following statement true (T) or false (F)
Which of the following is not a possible source of instability in velocity in the Monetarist model?
a. financial innovation. b. changes in monetary policy c. changes in interest rates d. credit cards.
According to Fishlow's (1972) work, the U.S. railroads before the Civil War were typically built "ahead of demand" by private capital
Indicate whether the statement is true or false