The following table shows payoffs to workers of each type (first number), High or Low; and to the firm (second number). There are 50% of each type of workers. The workers are allowed to make a claim to the firm about what type they are. The firm, after listening to the claim, assigns them to either a demanding or an undemanding job. demanding undemanding H. 7;8 3:4 5;3 4;5 1. Which job will the firm offer and what will be its payoff if it does not believe the workers' claim? 2. What will be the firm's payoff if it does believe the workers and they tell the truth? 3. Assume the firm believes the workers. Does the low type have any incentives to lie?

The following table shows payoffs to workers of each type (first number), High or Low; and to the firm (second number). There are 50% of each type of workers. The workers are allowed to make a claim to the firm about what type they are. The firm, after listening to the claim, assigns them to either a demanding or an undemanding job. demanding undemanding H. 7;8 3:4 5;3 4;5 1. Which job will the firm offer and what will be its payoff if it does not believe the workers' claim? 2. What will be the firm's payoff if it does believe the workers and they tell the truth? 3. Assume the firm believes the workers. Does the low type have any incentives to lie?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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