Question: Explain how the optimal incentives contract would differ if the less risk-averse bank officer (Dashing in Figure) had generated the smaller expected profit (i.e., the

Explain how the optimal incentives contract would differ if the less risk-averse bank officer (Dashing in Figure) had generated the smaller expected profit (i.e., the lower hill-shapedcurve).

Sorting Managers with Linear Share Contracts More risk averse 96 Eess riSk averse 55 48 Venture capital personal banker Commercial onstruiction loan office 0.1% :S12(000) 0 0.3% 0.2% $24(000) 0.4% Profit-sharing rate

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