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Instruction Page 4
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In Part1, you will have one of the three types of the wage decision problem in each round:
One Job case 1
Two Jobs
One Job case 2
There is one empty job position and you want to hire a worker.
There are two workers, Ann and Bob.
With equal chance, only Ann wants to get a job, only Bob wants to get a job, or both want to get a job.
You have only ONE job. Thus, if both want to get a job, a fair coin decides who gets a job.
You will submit your wage offer but when you make the offer, you do not know if the worker who wants to get a job is
Ann, Bob, or both.
You offer only ONE wage for both Ann and Bob.
Each worker brings different revenue
Each worker has a minimum willingness to accept, which means the minimum wage that the worker would accept.
The worker accepts any wage higher than or equal to the minimum willingness to accept
In that case, your profit is: Revenue the worker brings you - Wage Offer
Otherwise, the worker rejects the offered wage
In that case, your profit is 0
Below is an example of this wage decision.
Revenue from each Worker
Ann
Bob
30
20
Minimum Willingness to Accept
Ann
Bob
5
15
Suppose that you choose the wage of 10. Then only Ann would accept the job because 10 is greater than Ann's minimum willingness to payoff and less than Bob's
minimum willingness to payoff
Then, with one third probability Ann comes to you and you get
Revenue from Ann - Your wage offer
= 30 - 10 = 20.
With one third probability Bob comes to you but he rejects your offer. Then, your final payoff will be 0.
With one third probability, both come to you. A fair coin decides who gets the offer.
If Heads up, you will offer the job to Ann and she will accept the offer. Your payoff will be 20
If Tails up, you will offer the job to Bob and he will reject the offer. Your payoff will be 0