Effects of...

Efficiency Wage Models

Shirking Model

Intuition:

Labor Turnover

Intuition:

Adverse Selection

Intuition: This problem occurs before the implementation of the contract, and thus is the opposite of the moral hazard problem (agent changes behavior after contract). A great example (future class) is the White Elephant gift game (or many pranks). In the labor market, this would mean that employers want to offer higher-than-market-clearing wages off the bat in order to especially attract high-productivity people to their pool of applicants.

Sociological Model

Intuition: