Consider a context with unobservability of theworkers’ effort such

as that presented in Subsection 9.3.2 but with the following additional possibility.

Now, if a particular worker exerts no effort, the situation is detected by the firm

with some independent probability *q**, *even if that worker turns out to be productive.

(Note that the model described in the text follows from the particularization *q *= 0*.*)

Assume the probability *q *is a costly control variable of the firm. Specifically,

suppose that, for any “chosen” *q*, the firm incurs a cost given by *C*(*q*) = *q*2*. *Fix the

values for the parameters of the model as follows: *p *= 0*.*1*, **y*1 = 3*, **y*2 = 2*, ω*ˆ = 0*,*

*δ *= 0*.*5. Then, compute the optimal value of *q *that maximizes the discounted profits

of the firm at an equilibrium analogous to that considered in the text.