A software engineer seeks promotion in his tech firm. His manager is aware that his

ability, $\backslash$theta $,$ is uniformly distributed in the interval $[\backslash$theta $,$

$\backslash$theta $].$ Assume that the employee knows

his ability. To convince his manager that he is worth promoting, the employee has an

$1$

option of taking a sabbatical and getting an Executive MBA degree, and disclosing

the resulting GPA when applying for the promotion. The manager wants to promote

the employee only if his ability is at least $\backslash$theta $.$ The payoff of the employee from being

promoted is $\backslash$theta k for some k $>0$ given. This means that a higher ability employee has

more to gain from being promoted.

$1.$ Suppose that the employee did not have the option of taking a year off for an

Executive MBA degree. What would be the outcome?