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The two workers have weaker incentives when placed on a team unless Conrad is con?dent that Dina will put forth a certain level of effort and vice versa. How would you modify the objective bonus contract to make Conrad is con?dent that Dina will put forth a certain level of effort and vice versa? Notes: There are somethings that you are not allowed to do. You cannot play Santa Claus with the shareholder's money and make x% larger. You cannot switch to a subjective bonus program because it is prohibitively costly to measure Dina and Conrad's effort in team setting.
This document contains various important questions and their appropriate answers in the subject field of Economics.
Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.
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