Changes

ReminderThe CEO can design a scheme that exploits the risk aversion of the agents using chance. The contract would work like this: If all employees exert work, each worker will get an equal share <math>1/N</math> of the effort. However, if any single worker does NOT work, then the payoffs will be determined by a lottery in which each employee gets a <math>\frac{1}{N}</math> chance of getting 100% of the combined output.  Note that CARA utility is <math>u(c)=1-e^{-\rho c}</math>.  The employee's utility from working is <math>\exp{\frac{1}{N}\sum_{i\neq j} z(e_{j})}</math>