Suppose the Probability of an Employee Being Caught Shirking,q,is a Function

question 55

Essay

Suppose the probability of an employee being caught shirking,q,is a function of the employer's monitoring,M,such that q = M/100.If workers must put up a $1,000 bond and the gain to each worker from shirking is $100,what is the employer's optimal level of monitoring that is just sufficient to discourage shirking?

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Definitions:

Social Ladder

A metaphorical depiction of the hierarchical structure of society, where individuals or groups can ascend or descend in social status.

Cancer

A disease characterized by the uncontrolled growth and spread of abnormal cells in the body.

Malignant Cell Growth

The uncontrolled proliferation of cells that leads to the development of cancer, capable of invading and destroying surrounding healthy tissues and organ.

Psychological Factors

Elements of an individual's psychological makeup, such as attitudes, emotions, or motivations that can influence behavior.