If ron is lazy he will surf the internet all day and he, Ask an Expert

Economics

You wish to hire Ron to manage your Dallas operations. The profits from the operations depend partially on how hard Ron works, as follows. Probabilities:

Profit = $10,000 Profit=$50,000

Lazy 60% 40%

Hard worker 20% 80%

If Ron is lazy, he will surf the Internet all day, and he views this as a zero cost opportunity. However, Ron would view working hard as a "personal cost" valued at $1000. What fixed percentage of the profits should you offer Ron? Assume Ron cares only about his expected payment less than any "personal cost."

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9472697

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