7 . Individual Problems 19-6You need to hire some new employees to staff your startup venture. You know that potential employees are distributed throughout the population as follows, but you can’t dis


7 . Individual Problems 19-6You need to hire some new employees to staff your startup venture. You know that potential employees are distributed throughout the population as follows, but you can’t distinguish among them:

Employee Value       Probability

$55,000                           0.25

$74,000                          0.25

$93,000                           0.25

$112,000                       0.25

The expected value of hiring one employee is.___?_____

Suppose you set the salary of the position equal to the expected value of an employee. Assume that employees will not work for a salary below their employee value.

The expected value of an employee who would apply for the position, at this salary, is.______?_____

Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is    _____?____.

7 . Individual Problems 19-6You need to hire some new employees to staff your startup venture. You know that potential employees are distributed throughout the population as follows, but you can’t dis


7 . Individual Problems 19-6You need to hire some new employees to staff your startup venture. You know that potential employees are distributed throughout the population as follows, but you can’t distinguish among them:

Employee Value       Probability

$55,000                           0.25

$74,000                          0.25

$93,000                           0.25

$112,000                       0.25

The expected value of hiring one employee is.___?_____

Suppose you set the salary of the position equal to the expected value of an employee. Assume that employees will not work for a salary below their employee value.

The expected value of an employee who would apply for the position, at this salary, is.______?_____

Given this adverse selection, your most reasonable salary offer (that ensures you do not lose money) is    _____?____.

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