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Business, 12.05.2021 01:00 pkcfox

Eric works at an electronics store in a mall. Eric doesn't like to work hard, and it costs him $100 to do so. Eric's employer cannot observe whether Eric works hard. If Eric works hard, there is a 90% probability that electronics goods profits will equal $400 a day and a 10% probability that electronics goods profits will equal $100 a day. If Eric shirks, there is a 90% probability that electronics goods profits will equal $100 a day and a 10% probability that electronics goods profits will equal $400 a day. Suppose Eric is paid $200 if electronics goods profits are $400 a day and $50 if electronics goods profits are $100 a day. Eric will because the net gain of from shirking is than the net gain of from working hard.

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Eric works at an electronics store in a mall. Eric doesn't like to work hard, and it costs him $100...
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