Question: Question 6 (2 points) Consider a situation where a principal hires an agent who may be good or bad. Not being able to identify

Question 6 (2 points) Consider a situation where a principal hires an

Question 6 (2 points) Consider a situation where a principal hires an agent who may be "good" or "bad". Not being able to identify the type of the agent, she must design two contracts (WG, eG) and (WB, EB) stipulating an effort level (e) and an associated wage (w). The utility of the agent is given by U=w-Be where B= 2 for the "good" type and B= 4 for the "bad" type. The agent's reservation utility is equal to 120. Which of the following are the correct incentive constraints that the contracts must satisfy? Ow-4(e) 120 WG-2(ec)2 WB-2 (B) Owc-2(ec) 120 WB-4(B) WG - 4(ec)

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