If Tom is lazy, he will surf the Internet all day, and he views this as a zero cost opportunity. However, Tom would view working hard as a "personal cost" valued at $1,000. What fixed-percentage of the profits should you offer Tom? Assume Tom only cares about his expected payment less any "personal cost."

Example to use to solve the question above:

You wish to hire Tom to manage your New York operations. The profits from the operations depend partially on how hard Tom works, as follows:

	Probabilities
	Profit = $12,000	Profit = $40,000
Lazy Worker	70%	30%
Hard Worker	20%	80%