Determine the equilibrium outcomes or a pooling

Assignment Help Microeconomics

Reference no: EM13198994

Consider the education signaling model presented in class. The motivated worker is paid $900,000 in terms of present value of lifetime income while the unmotivated worker is paid $750,000. The monetized disutility of getting an MBA degree (including the actual cost) is $10,000 for a motivated worker and $20,000 for the unmotivated worker. An employer does not know workers' motivation level.

a. Assume the proportion of motivated workers is 20%. Determine the equilibrium outcomes (wages and net payoffs to each type of worker) for a pooling and a separating equilibrium.

b. Assume the proportion of motivated workers is 50%. Determine the equilibrium outcomes (wages and net payoffs to each type of worker) for a pooling and a separating equilibrium.

c. Would the unmotivated worker always prefer a pooling equilibrium to a separating equilibrium? What about the motivated worker?

Reference no: EM13198994

Questions Cloud

How far apart are they after 1 hour : Car A and Car B leave the origin at noon. Car A travels north at 264 mph and car B travels east at 448 mph.

State organizational behavior terminology and concepts paper : Organizational Behavior Terminology and Concepts Paper · Write a 700 word paper in which you explain the following key concepts and terminology:

Compute the first quartile and third quartile : Compute the first quartile and third quartile.

How many of each did light bright warehouse sell : Light Bright Warehouse sells boxes of high efficiency light bulbs ($5 box) and switch plates ($10 each). In May, total sales were $42000. Customers bought 5 times as many boxes of light bulbs as switch plates. How many of each did Light Bright War..

Determine the equilibrium outcomes or a pooling : The monetized disutility of getting an MBA degree (including the actual cost) is $10,000 for a motivated worker and $20,000 for the unmotivated worker. An employer does not know workers' motivation level.

If a filled container of juice is selected at random : These probabilities represent the probability of one container out of the total sample having the specified characteristics. Half the containers are filled on machine I and the other half are filled on machine II.

State examples of email differences that cause frustration : "When Americans and Europeans email one another for buisness reasons, frustration often ensues." -Why, according to Weiner, is this so?

How fast is the area of the ripple increasing : A stone is tossed into a pond creating a circular ripple whose radius increases at a rate of 3 feet per second. In square feet per second, how fast is the area of the ripple increasing 15 seconds after the stone hits the water?

What conclusion can you make : if

User Account

All Pages