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In: Economics

Suppose that you are an employer and want to hire people for two positions. These positions...

Suppose that you are an employer and want to hire people for two positions. These positions pay different amounts and require different levels of skill or dedication. If you know that taking rigorous classes in college is a measure of how skilled or dedicated one is how can you use this information to design a mechanism to get the “right” people to the “right” job?

Building off of the above information, suppose the cost of a hard class is $5,000 for the more skilled person and $8,000 for the less skilled person. Further, suppose the two salaries are $200,000 and $100,000. What are possible requirements to obtain the $200,000 dollar salary? How might you apply this type of thinking to create optimal contracts for workers whose effort you can’t observe? (Game Theory)

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Rahul Sunny answered 2 years ago
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