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.© BrainMass Inc. brainmass.com June 22, 2018, 3:10 pm ad1c9bdddf
Solution calculates the minimum commission to provide an incentive for hard work through expected payoff to a new employee. 40 words.