122- + =302 + 03 In the principal-agent model the agent's utility function is given by:...

 

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122- + =302 + ²03 In the principal-agent model the agent's utility function is given by: U(w.e) = w^1/2-e. and only two effort levels are possible: e-0 (low) and e-1 (high). The agent has the possibility to undertake work elsewhere and his utility level will then be U=1. If the principal can observe the agent's effort, what remuneration should he offer the agent so as to make sure that the latter will not leave to work elsewhere? W a) w=3 b) w=2 c) w=1 w=4 e) w=5 122- + =302 + ²03 In the principal-agent model the agent's utility function is given by: U(w.e) = w^1/2-e. and only two effort levels are possible: e-0 (low) and e-1 (high). The agent has the possibility to undertake work elsewhere and his utility level will then be U=1. If the principal can observe the agent's effort, what remuneration should he offer the agent so as to make sure that the latter will not leave to work elsewhere? W a) w=3 b) w=2 c) w=1 w=4 e) w=5

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