Answer just part a) Rafe is a python programmer with extremely unique and valuab

Question

Answer just part a) Rafe is a python programmer with extremely unique and valuable skills. He has worked at TiltSoft Inc., a Silicon Valley startup firm, for five years. The firm, therefore, has very good information regarding the value of his unique skills. They know whether his skills are "extremely valuable or just "valuable." Because Rafe has worked at TiltSoft so long and knows their products so well, his productivity is higher at TiltSoft than elsewhere Rafe's employment contract is up for renewal and he and his employer are bargaining over his future salary. Assume Rafe must make a take-it-or-leave-it salary offer to the firm. If the firm refuses Rafe's offer, Rafe will leave TiltSoft and become an entrepreneur. Since Rafe's skills are so unique, TiltSoft cannot replace Rafe the value his skills would create at TiltSoft is simply lost. l the value of his skills is given in the table below. (Assume everyone knows all numbers in this table.) Rafe's Productivity Rafe's Productivity as an Entrepreneur at TiltSoft Valuable" Extremely Valuable $100,000 S300,000 $150,000 $350,000

Explanation / Answer

It is given that there is symmetric information, Rafe's salary will be $1,50,000 if he is valuable. If a firm knows that he is valuable then the firm will definitely hire him because he is valuable. Rafe cannot refuse the offer because by being an entrepreneur he will get $1,00,000.

Rafe's salary will be $3,50,000, if he is extremely valuable. The reason is going to be the same as described earlier when Rafe is valuable.  

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