This exercise is a version of exercise 13.B.3 in Mas-Colell et al. Consider a positive selection version of the model considered in exercise 2 above. Suppose that r (0) = a (1 0), where a is a parameter satisfying 1 > a > . Thus, workers with a higher productivity have a lower reservation wage. 1. Show that the higher productivity workers are the ones choosing to work at any given wage. 2. Compute the SPNE of this game. 3. Show that the level of employment in equilibrium is too high with respect to the first best. 4. Show that the equilibrium is constrained-Pareto efficient. This exercise is a version of exercise 13.B.3 in Mas-Colell et al. Consider a positive selection version of the model considered in exercise 2 above. Suppose that r (0) = a (1 0), where a is a parameter satisfying 1 > a > . Thus, workers with a higher productivity have a lower reservation wage. 1. Show that the higher productivity workers are the ones choosing to work at any given wage. 2. Compute the SPNE of this game. 3. Show that the level of employment in equilibrium is too high with respect to the first best. 4. Show that the equilibrium is constrained-Pareto efficient