problem 1: Imagine the ABC Corporation adopts the policy prohibiting its top-level executives, whose compensation packages comprise awards of ABC stock each year, from selling such stock till two years after they leave ABC. Use economic theory to examine the incentive effects of this prohibition.

problem 2: An economic study has found that men who are judged to be “ugly” have earnings which are 9% less than their “average-looking” peers with the same age, occupation, and education; those who are considered “handsome” make 5% more than average. Is this evidence of labour-market discrimination? Illustrate fully.