### A simple model of monitoring a company consists of two

Assignment Help Microeconomics
##### Reference no: EM13377765

(A simple model of monitoring.) A company consists of two kinds of employees, tall and short. Each person can work in either of two jobs, honest work or stealing from the company. The wage to honest work for a short person is wS, while the wage for a tall person is wT. Whichever job she chooses, each person reports to a boss. The boss sees the person's height, but not her job. The boss has to decide whether or not to stop the person and inspect her work. For simplicity, think of this as two games, one between the tall person and the boss and one between the short person and the boss.The payoffs to the person and the boss are as follows (where the person is player 1 and the boss is player 2):

Inspect                 Don't inspect

Steal              0, 10                       10, 0

Honest Work      wi-5, 4                   wi, 5

Assumptions: wS < wT. Stealing from the company is very profitable, so wT < 10. Finally, honest work is better than stealing from the company, even if the boss inspects the honest person. That is, 5 < wS.

Find all Nash equilibria in pure and mixed strategies for the game between the short p?dun and the boss and for the game between the tall person and the boss. Compare the likelihood of a short person being inspected to the likelihood of a tall person being inspected. Also, compare the probability a short person steals from the company to the probability a tall person does so. Compare the wage difference wT - wS to the difference in equilibrium payoffs between the two types.

### Previous Q& A

#### U-build-it hardware company is a chain of five stores

u-build-it hardware company is a chain of five stores selling hardware products in a midwestern state. it offers a full

#### Part athis part consists of 40 multiple choice questions

part athis part consists of 40 multiple choice questions. each question has one and only one correct answer. you need

#### The concept of social security as originally envisioned by

the concept of social security as originally envisioned by president roosevelt the viability of social security within

#### In this question you will examine the effect of a sales tax

in this question you will examine the effect of a sales tax on a monopolists profit maximizing price and rate of

#### Consider a monopolist that faces the constant elasticity

consider a monopolist that faces the constant elasticity demand curve yp pa where a lt 0 and the total cost function c

#### If the economy is operating on the upward sloping portion

if the economy is operating on the upward sloping portion of the short-run aggregate supply sas curve show that an

#### You are given the following equation for the aggregate

you are given the following equation for the aggregate demand ad and short-run aggregate supply sas curve ad y 1.25a p

#### How slow the publishing industry has been in adopting new

how slow the publishing industry has been in adopting new changes to technology. i wonder what the aggregate business

#### Select any 3 parts of the united states constitution or the

select any 3 parts of the united states constitution or the amendments to the constitution and write a discussion post

#### Akt phopshorylation collapse akt phosphorylation can

akt phopshorylation collapse akt phosphorylation can indicate prognosis for cancer diagnosis in most cases

### Similar Q& A

#### When the price of a good is 5 the quantity demanded is 100

when the price of a good is 5 the quantity demanded is 100 units per month when the price is 7 the quantity demanded is

#### The relationship between the inflation rate and changes

Classify the following topics as relating to microeconomics or macroeconomics. a family’s decision about how much income to save. the effect of government regulations on auto emissions

#### Evaluate time warner inc working capital position.

1. Evaluate Time Warner Inc's working capital position.

#### Explain cost savings and reduction in risks associated

LG electronics plans to invest \$30 million by 2010 to make this happen with the hope that the cost savings and reduction in risks associated with vertical integration justify the investment.

#### Sppose demand and supply are given by qd 50 - p and qs

suppose demand and supply are given by qd 50 - p and qs frac12 p - 10.a. what are the equilibrium quantity and price

#### Policies to be enact to increase total consumption spendings

Based on the assumption that each family spends \$100 plus one-half of its total income each week, what is the total weekly consumption spending of a poor family prior to instituting the tax? What is the total weekly consumption spending of a rich ..

#### What is significance of the opportunity cost to the search

Explain: "without a market for pollution rights, dumping pollutants into the air or water is cost less; in the presence of the right to buy and sell pollution rights, dumping pollutants creates an opportunity cost for the polluter.

#### Various forms of market structure

The president of your corporation, Mr. daily, has asked you to make a report describing the many forms of market structure. He describe to you that the report will be handed out to staff prior to the staff meeting next week

#### Explain position is profit-maximizing position for any firm

1. How do you know that the firm represented in the graph above is a purely competitive firm 2. To maximize profits, this firm will produce at what output level (one letter) 3. Explain why this MR=MC position is the profit-maximizing position for any..

#### Estimate gdp impact of a positive change in govt spendings

You are told that 75 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals \$25 billion.

#### What must hold the argument to withstand the ceos criticism

According to an article in Business Week Online, the company is not only the world's largest shipbuilder but also manufactures other industrial goods ranging from construction equipment and marine engines to building power points and oil refinerie..

#### Were the savings and loans winners as inflation skyrocketed

In the 1970s, savings and loan associations primarily earned their income from extending fixed-rate home loans. They extended many of these loans in the early 1970s when inflation was low. Were the savings and loans winners