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Assume the following positive externality coordination game. A department of certain company employs workers A and B. The company has an internal training program that allocates up to 100 hours of training to the department. Initially, the manager decides to allocate no=35 training hours to A and (1-no)=65 hours are allocated to B. This decision is revised every week as follows: if one employee (say B) performs better than the other employee (A) at work, the manager allocates an extra hour to B and one less hour to A. The performance of each worker is measured with the functions BA(n) and BB(n-1) represented on the diagram below. BA(n) 4 0 100 n: Number of Training Hours of Employee A 1-n: Number of Training Hours of Employee B BB (1-n) 100 0 According to this model (select all that apply): a. The initial decision by the manager to allocate more hours to B was inadequate, because although B was the more skilled worker, Employer A had more potential. b. The initial decision by the manager to allocate more hours to B was adequate, because B was the more skilled worker initially and hence had more potential. C. "The strong (Employee B) will become stronger over time." d. The initial decision by the manager to allocate more hours to B can be described as an adverse selection possibly caused by asymmetric information (not knowing enough about the potential of the workers). e. "The weak (Employee A) will become weaker over time." f. Both Employees A and B will end up with the same skill level.

Assume the following positive externality coordination game. A department of certain company employs workers A and B. The company has an internal training program that allocates up to 100 hours of training to the department. Initially, the manager decides to allocate no=35 training hours to A and (1-no)=65 hours are allocated to B. This decision is revised every week as follows: if one employee (say B) performs better than the other employee (A) at work, the manager allocates an extra hour to B and one less hour to A. The performance of each worker is measured with the functions BA(n) and BB(n-1) represented on the diagram below. BA(n) 4 0 100 n: Number of Training Hours of Employee A 1-n: Number of Training Hours of Employee B BB (1-n) 100 0 According to this model (select all that apply): a. The initial decision by the manager to allocate more hours to B was inadequate, because although B was the more skilled worker, Employer A had more potential. b. The initial decision by the manager to allocate more hours to B was adequate, because B was the more skilled worker initially and hence had more potential. C. "The strong (Employee B) will become stronger over time." d. The initial decision by the manager to allocate more hours to B can be described as an adverse selection possibly caused by asymmetric information (not knowing enough about the potential of the workers). e. "The weak (Employee A) will become weaker over time." f. Both Employees A and B will end up with the same skill level.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume the following positive externality coordination game. A department of certain company employs workers A and B. The company has an internal training program that allocates up to 100 hours of training to the department. Initially, the manager decides to allocate no=35 training hours to A and (1-no)=65 hours are allocated to B. This decision is revised every week as follows: if one employee (say B) performs better than the other employee (A) at work, the manager allocates an extra hour to B and one less hour to A. The performance of each worker is measured with the functions BA(n) and BB(n-1) represented on the diagram below. BA(n) 0 100 n: Number of Training Hours of Employee A 1-n: Number of Training Hours of Employee B BB (1-n) 100 0 According to this model (select all that apply): a. The initial decision by the manager to allocate more hours to B was inadequate, because although B was the more skilled worker, Employer A had more potential. b. The initial decision by the manager to allocate more hours to B was adequate, because B was the more skilled worker initially and hence had more potential. C. "The strong (Employee B) will become stronger over time." d. The initial decision by the manager to allocate more hours to B can be described as an adverse selection possibly caused by asymmetric information (not knowing enough about the potential of the workers). e. "The weak (Employee A) will become weaker over time." f. Both Employees A and B will end up with the same skill level.
Transcribed Image Text:Assume the following positive externality coordination game. A department of certain company employs workers A and B. The company has an internal training program that allocates up to 100 hours of training to the department. Initially, the manager decides to allocate no=35 training hours to A and (1-no)=65 hours are allocated to B. This decision is revised every week as follows: if one employee (say B) performs better than the other employee (A) at work, the manager allocates an extra hour to B and one less hour to A. The performance of each worker is measured with the functions BA(n) and BB(n-1) represented on the diagram below. BA(n) 0 100 n: Number of Training Hours of Employee A 1-n: Number of Training Hours of Employee B BB (1-n) 100 0 According to this model (select all that apply): a. The initial decision by the manager to allocate more hours to B was inadequate, because although B was the more skilled worker, Employer A had more potential. b. The initial decision by the manager to allocate more hours to B was adequate, because B was the more skilled worker initially and hence had more potential. C. "The strong (Employee B) will become stronger over time." d. The initial decision by the manager to allocate more hours to B can be described as an adverse selection possibly caused by asymmetric information (not knowing enough about the potential of the workers). e. "The weak (Employee A) will become weaker over time." f. Both Employees A and B will end up with the same skill level.
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