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(Solved): Two candidates are interested in your position, which pays $100,000 per year. You have high confiden ...



Two candidates are interested in your position, which pays $100,000 per year. You have high confidence that Enzos productivity will be $400,000 worth of output every year. Karlas productivity in every year, is expected to be $600,000 with probability 0.5 and $200,000 with probability 0.5. This productivity is general (not firm-specific). It takes you one year to determine whether Karlas productivity is high or low. This job will last for 2 years, and firing an employee is impossible. You care about total net profit without discounting, and you are risk neutral.a. What is the expected profit from hiring Enzo?b. What is the expected profit from hiring Karla?c. Which worker should you hire? Suppose that instead of keeping an employee for 2 years, you are able to fire (without cost) an employee after 1 year of evaluation and hire the other employee for the second year. d. What is the expected profit from hiring Enzo?e. What is the expected profit from hiring Karla?f. Which worker should you hire?



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