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Both Firm A and Firm B can make one of two possible job offers (see screenshot below):

Step 1: Selecting a Contract Offer

For Firm A, Wage can be one of nine possible amounts: 20, 25, 30, 35, 40, 45, 50, 55, or 60 Lira.

For Firm B, Wage can be one of twelve possible amounts: 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, or 75 Lira.

The Wage is fixed, meaning, the worker will receive the Wage regardless of the Production Level.

If you choose Job Offer #1, the worker will set their own Wage.

If, instead, you choose Job Offer #2, you will set the worker's Wage (see screenshot below):

Step 1b: Selecting a Contract Offer

You will be provided with a table of possible payoffs associated with a given Wage amount and each possible Production Level. Once a Wage has been entered, you may select “Calculate Payoffs.” Then, the table will populate with the associated payoffs for you and the worker based on the entered Wage amount and each possible Production Level. For example, if you enter a Wage of 50 Lira and select “Calculate Payoffs,” then the table would populate with the following values (see tables below):

If you are assigned to act as Firm A:

Production Level12345678910
Your Payoff-20104070100130160190220250
Worker Payoff50484644424038363432

You may enter a new Wage amount and click “Calculate Payoffs” as many times as you wish to observe payoffs for different Wage levels.

Remember, the worker will view both your offer and another firm’s offer and select one (see screenshot below):

Step 1

Note: during the labor market, “X” will represent which job offer the firm is making (1 or 2), and “Y” will be the Wage amount in Lira of the firm’s offer if they choose to set the worker's Wage.

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