Solved: Expected payoff of shirker or a hard worker, Microeconomics

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Expected payoff of shirker or a hard worker

Question:

Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker. Suppose working hard raises the probability of making a sale from 40% to 80% (thus raises the probability of making a commission C by the same percentage). If the cost of working harder is $150, what commission C should you offer the worker to provide an incentive to work hard.

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Microeconomics: Expected payoff of shirker or a hard worker

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