Reference no: EM13978139
A rm has two divisions, each of which has its own manager. Managers of these divisions are paid according to their effort in promoting productivity in their divisions, which is judged by comparison with other managers and other divisions. If both managers are judged as having expended high effort, each earns $150,000/year. If both are judged to have expended low effort, each earns $100,000/year. But if one of the two managers shows high effort while the other shows low effort, the high effort manager is paid $150,000 plus a $50,000 bonus, while the second (low effort) manager gets a reduced salary of $80,000. Managers make their effort decisions independently and without knowledge of the other manager's choices.
(a) Assume that expending effort is cost less to the managers and draw the payoff table for this game. Find the NASH equilibrium of the game and explain whether the game is a prisoners' dilemma.
-1.png)
(b) Now suppose that expending high effort is costly to the mangers (such as a costly signal of quality). In particular, suppose that high effort" costs an equivalent of $60,000/year to a manager that chooses this effort level. Draw the game table for this new version of the game and find the Nash equilibrium. Explain whether the game is a prisoners' dilemma and how it has changed from the game in part a.
-2.png)
(c) If the cost of high effort is equivalent to $80,000/year, how does the game change from that described in part b? What is the new equilibrium? Explain whether the game is a prisoners' dilemma and how it has changed from the games in part a and b.
-3.png)
(d) Assume now that the owner of the firm can't actually observe manager effort, but instead determines effort based on relative output of the two divisions, meaning that the manager with the division that produces the most is assumed to have provided the highest effort. If the payoffs are the same in part c, does this change the outcome of the game? If the managers play this game repeatedly, does it matter whether effort is directly observable?
|
Is the denial of bail the same as imposing excessive bail
: Case Study: United States v. Salerno 481 U.S. 739 (1987). Discuss the implications the 8th Amendment has on the right to bail. Is the denial of bail the same as imposing excessive bail
|
|
How far away from thedoor is passenger after three seconds
: A passenger standing on the platform is 5 m away from the door when the train starts to pull away and heads toward the door at acceleration of 1.2 m/s2. How far away from thedoor is the passenger after 3 seconds?
|
|
What should be the distance between the lenses
: We use a converging lens as the objective (focal length fo λ 25 cm) and a diverging lens as the eyepiece (focal length fe λ 5cm) to construct a simple Galilean telescope. What should be the distance between the lenses?
|
|
Pros and cons of the plea bargain
: The written assignment this week is for you to thoroughly discuss the pros and cons of the plea bargain as used in the American court system, and to describe why the plea bargain is used so often, the mechanics of how a plea bargain comes about, a..
|
|
Assume that expending effort is cost less to the managers
: Assume that expending effort is cost less to the managers and draw the payoff table for this game.
|
|
What frequency will the force make the object vibrate
: Damping is negligible for a 0.175-kg object hanging from a light, 6.30-N/m spring. A sinusoidal force with an amplitude of 1.70 N drives the system. At what frequency will the force make the object vibrate with an amplitude of 0.530 m?
|
|
What are the roles of the corrections organization
: What are the roles of the corrections organization, the probation officer, and the offender in the outcome of the probationary period? When can we determine the probationary period be deemed a success
|
|
How long is the ladder according to carmen
: Dan (a very good sprinter) holds a 5.0-m-long ladder parallel to the ground. He then starts to run, eventually reaching 98% of the speed of light. How long is the ladder according to Carmen, who is standing on the ground as Dan goes by?
|
|
Find the ratio wa/wb of the widths of the two slits
: A dark fringe in the diffraction pattern of a single slit is located at an angle of θA = 25o. With the same light, the same dark fringe formed with another single slit is at an angle of θB = 62o. Find the ratio WA/WB of the widths of the two slits.
|