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Author Question: Suppose employees pay a bond of 1,000 to an employer. The gain from shirking is 400. Monitoring ... (Read 145 times)

darbym82

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Suppose employees pay a bond of 1,000 to an employer. The gain from shirking is 400. Monitoring devices have been installed so that there is a 50 chance of being caught if you are shirking. The company is considering the installation of additional monitoring devices to increase the chance of catching a shirker to 100. They feel this is needed to deter all shirking. What is your recommendation to the company? Explain.
 
  What will be an ideal response?

Question 2

Suppose an employer has monitoring devices established so that the probability of an employee being caught while shirking is 0.2. If the gain to the employee from shirking is 1,000, how large a bond will deter shirking?
 
  What will be an ideal response?


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Chelseyj.hasty

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darbym82

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Reply 2 on: Jul 1, 2018
Excellent


upturnedfurball

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

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