More practice question to do for class on Friday Sept. 24th
Consider a sunglass salesman and 2 states of the world: sunny and rainy. Each state is equally
likely. Suppose the sunglass salesman has income of 150 if sunny and 50 if rainy. The salesman
has a
More practice question to do for class on Friday Sept. 10th
Consider a rectangle with base and height of lengths \ and ] . The area and perimeter of the
rectangle are respectively: E \] and T #\ #] . Write down the Lagrangian problem for
maximizing the re
Economics 217Contracts, Organizations, and Markets
Fall 2010Morey 501
Mark Bils
Harkness 221
Information
1. Text and Readings
An Introduction to the Economics of Information, Incentives and Contracts by Ins Macho-Stadler
and J. David Prez-Castrilla, 2nd e
Practice question 3
Consider a risk averse firm, maximizing expected utility, that writes a contract with a risk neutral
worker. The utility function for the firm is FB A B A"2 , where B is output and A is the
wage. The utility function for the worker is
Practice question 5
Suppose there are two types of workers: type A have productivity of 2, type B have productivity of
1. A fraction ; of workers are A-types. There is competition for workers. So under symmetric
information A-types would earn a wage equal
Practice question 4
Consider a seller of specialty chocolate bars. The seller chooses qualities of bars to make and sell.
Making a candy bar of quality ; costs ; . (So the average and marginal cost of quality equals ").
Potential buyers buy either zero or
Economics 217
Problem Set 6
Fall 2011
(Answers to questions 1-2 due in class Wednesday, Dec. 7th, to be discussed Friday, Dec. 9th;
Please denote which recitation you plan to attend.)
1.
Consider a seller of specialty chocolate bars. The seller chooses qu
Economics 217
Fall 2011: Dec. 19th
Final Exam
Please answer all four questions in the bluebook
1.
Consider a seller of specialty chocolate bars. The seller chooses qualities to make and sell. Making
a candy bar of quality costs . Potential buyers buy eith
Economics 217
Fall 2010: Dec. 18th
Final Exam
Please answer all four questions in the bluebook
1.
A risk neutral firm writes a contract with a risk averse worker. The worker provides either low or
high effort; the worker views effort as costly. There are
Economics 217
Spring 2010
Problem Set 6
(Answers to questions 1-2 due in class Tuesday, April 13th, to be discussed
Friday, April 16th; please denote which recitation you plan to attend on Friday)
1.
Suppose there are 2 types of workers: A types and B typ
Economics 217
Spring 2010: May 6th
Final Exam
Please answer all four questions in the bluebook
1.
Consider an accountant and an umbrella salesman. There are 2 states of the world: sunny and rainy;
probability of rain equals
. The accountant has income of
Economics 217
Fall 2012
Problem Set 2
(Answers to questions 1 and 2 only, due in class Wednesday, October 10th, to be discussed
Friday, October 12th. Please denote which recitation you plan to attend.)
fall1
1ex
am
Consider a worker who, conditional on re