Consider again the previous question regarding retail store management. Suppose that Fred is currently paying Barney a flat $10 wage. Now suppose Bart proposes that Fred offer Barney 83.33 percent of profits (but no wage) as Barney's compensation contract to elicit a higher effort level. Comparing these two options, we would conclude that:

Barney would work at high effort but Fred would not offer such a contract.

Barney would not accept the contact.

Barney would work at high effort and Fred would offer such a contract.

Barney would work at medium effort and Fred would offer such a contract.