A principal has different options of setting wages and the Agent
has different levels of work. Consider this model with the
following special values:
u(2√w); dH=15, dL=0, g=300, m=200, b=100,
wb=wage base=0
eH results in a probability of profit levels g, m, b
as 0.5, 0.3, 0.2
eL results in a probability of profit levels g, m, b
as 0.2, 0.3, 0.5
Assuming the Principal chooses a pure wage scheme, what would be
the expected payoffs for the Principal and...