Employee Monitoring Employee's best response B,(q) Expected Shirk (r=0) if a<0.5 payoffs Work (r=1)if q0.5 50 Any mixed strategy (0srs1) if 0.5 100(1-q Expected 100r-10 200r-100 payoffs Manager Monitor g) Not Monitor(1-q) Work(r)50 9050 100 Employee shik(1-)0,=10100,-100Employee Monitoring ◼ Employee’s best response B1(q): ➢ Shirk (r=0) if q<0.5 ➢ Work (r=1) if q>0.5 ➢ Any mixed strategy (0r1) if q=0.5 21 Manager Monitor ( q ) Not Monitor (1-q) Employee Work ( r ) 50 , 90 50 , 100 Shirk (1-r ) 0 , -10 100 , -100 50 100(1-q) Expected payoffs Expected payoffs 100r-10 200r-100