Question: For the policy to work, it needs to be incentive compatible. The number of examinations required ( ) should be strict enough that the regular

For the policy to work, it needs to be incentive compatible. The number of examinations required

(

)

should be strict enough that the regular workers don

t bother to meet it but not so strict as to discourage even the exceptional workers from attempting it

.

What is the minimum number of examinations required to ensure that the regular workers don

t find it worth it to reach the requirement? What is the maximum number of examinations the firm can require beyond which the exceptional workers would just prefer the regular worker wage?

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