Suppose that a worker interacts with a firm as follows:The workerfirst decides how much to invest in developing his skills. Letxdenote the worker’sinvestment, and suppose that the investment entails a personal cost to the worker of x^2; assume x≥0. If the worker works in the firm, then his investment generatesreturnaxfor the firm. If the worker decides to work on his own (separate fromthe firm), then his investment generates a return ofbxthat he keeps. The numbersaandbare positive constants satisfying a > b(which means that the investmentis more productive in the firm). After the worker chooses his investment, the firmobserves it. Then the firm offers the worker a wagew, and the worker accepts orrejects it (ultimatum bargaining). If the worker accepts the wage, then he works inthe firm. If he rejects the wage, then he works on his own.
a. Draw the game tree. Find and report the subgame perfect equilib-rium of this game. What investment level is selected?
b. Consider a variant of the game in which the worker gets to makethe wage offer (and the firm accepts or rejects the offer).What investmentlevel will prevail in equilibrium?
Answers: 1
Other questions on the subject: Business
Business, 22.06.2019 05:30, amandajbrewerdavis
Eliza works for a consumer agency educating young people about advertisements. instead of teaching students to carefully read advertisement claims, she encourages them to develop a strong sense of self and to keep their life goals and dreams separate from commercial products. why might eliza's advice make sense?
Answers: 2
Business, 22.06.2019 17:50, nayelieangueira
What additional information about the numbers used to compute this ratio might be useful in you assess liquidity? (select all that apply) (a) the maturity schedule of current liabilities (b) the average stock price for the industry (c) the average current ratio for the industry (d) the amount of current assets that is concentrated in relatively illiquid inventories
Answers: 3
Business, 22.06.2019 20:00, nestergurl101
With the slowdown of business, how can starbucks ensure that the importance of leadership development does not get overlooked?
Answers: 3
Business, 22.06.2019 22:00, mdaniella522
In 2018, laureen is currently single. she paid $2,800 of qualified tuition and related expenses for each of her twin daughters sheri and meri to attend state university as freshmen ($2,800 each for a total of $5,600). sheri and meri qualify as laureen’s dependents. laureen also paid $1,900 for her son ryan’s (also laureen’s dependent) tuition and related expenses to attend his junior year at state university. finally, laureen paid $1,200 for herself to attend seminars at a community college to her improve her job skills. what is the maximum amount of education credits laureen can claim for these expenditures in each of the following alternative scenarios? a. laureen's agi is $45,000.b. laureen’s agi is $95,000.c. laureen’s agi is $45,000 and laureen paid $12,000 (not $1,900) for ryan to attend graduate school (i. e, his fifth year, not his junior year).
Answers: 2
Do you know the correct answer?
Suppose that a worker interacts with a firm as follows:The workerfirst decides how much to invest in...
Questions in other subjects:
Biology, 26.03.2021 23:10
Social Studies, 26.03.2021 23:10
History, 26.03.2021 23:10
