Question: 1) Your firm is hiring a software developer for a project that you expect to make 200,000 in revenue for you. However, the success

1) Your firm is hiring a software developer for a project that you expect to make 200,000 in revenue for you. However, the success

1) Your firm is hiring a software developer for a project that you expect to make 200,000 in revenue for you. However, the success of the project is not certain, and is dependent on the level of effort put forth by the developer the probability If the developer works hard, success is 75%.. If the developer takes it easy, the probability of success is 50%. The developer values the disutility of hard work at 20000 and the disutility of easy work at O. There are other jobs the developer could take that require no effort and pay 100000 OK a) suppose you are considering offering the worker a salary of 80000 what is your expected profit with this compensation pack age ? () You are also considering an alternative compensation package that includes solary plus a a successful project. In order to encourage the worker to work hard, What is the incentive constraint you would offer the worker ? Compatibility In order to encourage the worker to take the job and work work hord, what would be an effective participation constraint? What will be the total compensation paid to the worker that will satis by The incentive compatibility constraine and the participation constraint 1 e) what are the firm's expected profits under this salary plus bonus compensation scheme 4) which compensation package should you offer the base salary of the salary plu's compensation 80,000 OV bonus package 7

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