A.In the context of Subsection 9.3.2 with effort unobservability, assume that (9.46) does not hold. Is there any subgame-perfect equilibrium where only one worker is hired every period? Discuss your answer.

 

B. Consider a context as described in Section 9.3, but with worker 1 being uniformly more productive than worker 2 for each scale of production, and suppose this fact is common knowledge. (That is, if yik denotes the productivity of worker when workers are employed by the firm, one has yyfor each = 12.) Specify conditions on the parameters of the model such that, with unobservability of workers’ effort, there exists an equilibrium where worker 1 is always hired but worker 2 never is.

Found something interesting ?

• On-time delivery guarantee
• PhD-level professional writers
• Free Plagiarism Report

• 100% money-back guarantee
• Absolute Privacy & Confidentiality
• High Quality custom-written papers

Related Model Questions

Feel free to peruse our college and university model questions. If any our our assignment tasks interests you, click to place your order. Every paper is written by our professional essay writers from scratch to avoid plagiarism. We guarantee highest quality of work besides delivering your paper on time.

Grab your Discount!

25% Coupon Code: SAVE25
get 25% !!