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that I had to pay him for a net return of 2.
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It seems like that's a 100% profitable project,
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so it looks very attractive.
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What's the problem? The problem is if I only set,
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this is going to give us backward induction,
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if I set the wage equal to the going wage,
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so if I set W = 1 what will my agent do?
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He's going to cheat. The problem is if I set W = 1,
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which is the going wage, the going wage in Freedonia,
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the agent will cheat.
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If he cheats I just lose my investment.
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So how much do I have to set the W to?