Consider the following strategic situation concerning the owner of a firm (O), the manager of the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider the following strategic situation concerning the owner of a firm (O), the manager of the firm (M), and a potential worker (W). The owner first decides whether to hire the worker, to refuse to hire the worker, or to let the manger make the decision. If the owner lets the manager make the decision, then the manager must choose between hiring the worker or not hiring the worker. If the worker is hired then he or she chooses between working diligently and shirking. Assume that the worker does not know whether he or she was hired by the manager or the owner when he or she makes this decision. If the worker is not hired, then all three payers get a payoff of 0. If the worker is hired and shirks, then the owner and manager each get a payoff of -1, whereas the worker gets 1. If the worker is hired by the owner and works diligently, then the owner gets a payoff of 1, the manager gets 0, and the worker gets 0. If the worker is hired by the manager and works diligently, then the owner gets 0, the manager gets 1, and the worker gets 1. Represent this game in the extensive form (draw the game tree). O, M, W 1,0, 0 D. (diligent) S h -1, -1, 1 (shirking) D 0, 1, 1 (diligent) H" (hire) (hire) M -1, -1, 1 (manager decides) (shirking) N' 0, 0, 0 (not) (not hire) 0, 0, 0 Consider the following strategic situation concerning the owner of a firm (O), the manager of the firm (M), and a potential worker (W). The owner first decides whether to hire the worker, to refuse to hire the worker, or to let the manger make the decision. If the owner lets the manager make the decision, then the manager must choose between hiring the worker or not hiring the worker. If the worker is hired then he or she chooses between working diligently and shirking. Assume that the worker does not know whether he or she was hired by the manager or the owner when he or she makes this decision. If the worker is not hired, then all three payers get a payoff of 0. If the worker is hired and shirks, then the owner and manager each get a payoff of -1, whereas the worker gets 1. If the worker is hired by the owner and works diligently, then the owner gets a payoff of 1, the manager gets 0, and the worker gets 0. If the worker is hired by the manager and works diligently, then the owner gets 0, the manager gets 1, and the worker gets 1. Represent this game in the extensive form (draw the game tree). O, M, W 1,0, 0 D. (diligent) S h -1, -1, 1 (shirking) D 0, 1, 1 (diligent) H" (hire) (hire) M -1, -1, 1 (manager decides) (shirking) N' 0, 0, 0 (not) (not hire) 0, 0, 0
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Imagine an owner of a firm is thinking about raising prices. Describe the consequences of doing so as a monopolist, oligopolist, monopolistic competitor, and perfect competitor?
-
You are a business owner of a firm that services trucks. A customer would like to rent a truck from you for one week, while you service his truck. You must decide whether or not to rent him a truck....
-
You are a business owner of a firm that services trucks. A customer would like to rent a truck from you for one week, while you service his truck. You must decide whether or not to rent him a truck....
-
Ten thousand dollars is deposited in a savings account at 4.6% interest compounded continuously. When will the balance triple? O within a year of investment. O In 10 years approximately. none of the...
-
For which of the following combinations of P-value and significance level would the null hypothesis be rejected? a. P-value = 0.426 = 0.05 b. P-value = 0.033 = 0.01 c. P-value = 0.046 = 0.10 d....
-
Swift Company was organized on March 1 of the current year. After five months of start-up losses, management had expected to earn a profit during August. Management was disappointed, however, when...
-
What is a consistent-mass matrix?
-
Eggs are sorted into two sizes (large and extra large) at the Cheerful Chicken Dairy. Unfortunately, business has not been good lately, and since the Cheerful Chickens 40-year-old egg-sorting machine...
-
The income statement for Westbound Manufacturing is provided in the table below (all values are in million dollars): Gross sales less Cost of goods sold: Labour Raw materials Production overhead...
-
Most businesses sell several products at varying prices. The products often have different unit variable costs. Thus, the total profit and the breakeven point depend on the proportions in which the...
-
If a project costing $ 78000 has a profitability index of 1 and the discount rate was 12 %, then the present value of the net cash flows was undeterminable. less than $ 78000 . $ 78000 . greater than...
-
Will the expected value of a risky asset be higher or lower under a risk-neutral distribution than under the physical distribution? Why?
-
No dividend firm, some companies such as Amazon.com, Google and eBay choose to pay no dividends. Discuss this topic from the company's point of view as well as from the shareholders point of view....
-
Discuss how the Australian government and financial regulators have responded to the COVID-19 outbreak throughout 2020 to support the flow of credit to businesses.
-
Dividend discount model. The common stock of OliMarCo is selling for $17.00. The firm pays dividends that are expected to grow at a rate of 3.60% indefinitely. (a)If the current dividend is $1/share,...
-
Explain some of the Basic Principals Of Takaful and then List Some Useful Pointers When Buying An Insurance Policy Or Takaful Plan?
-
Sebele Creations ( Pty ) Ltd , a semi conductor company, is interested in venturing into e - commerce to expand its customer reach. However, the company is still stuck to the traditional business...
-
Where are the olfactory sensory neurons, and why is that site poorly suited for their job?
-
Economists insist that bankruptcy laws are always harmful to a well-functioning economy. a. True b. False
-
Non-discretionary fiscal policy has its impact by a. Magnifying the economic ups and downs already occurring. b. Purposefully adjusting interest rates. c. Congress focusing its constant attention on...
-
A stock index is a. Essentially the weighted sum of stock prices. b. The simple sum of stock prices. c. The geometric average of stock prices. d. The consensus view of professional economists.
-
Examine Fowlers account pattern on following characteristics: a. Simplicity b. Generality c. Completeness d. Stability e. Visual and graphical model f. Testability
-
What is Fowlers account pattern? Explain with the help of a diagram.
-
Draw a class diagram for resource rental pattern and its installation for library service by using analogy approach.
Study smarter with the SolutionInn App