ECONOMICS 5600 – Explain the right-to-manage model and provide your critical comments

1. Answer the following related questions:(a) Explain the right-to-manage model and provide your critical comments.(b) Describe the efficient bargaining model of MacDonald and Solowand provide your critical comments.(c) Describe the sequential bargaining model of Rubinstein. Thesequential bargaining model is non-cooperative in nature, yet thebargaining solution entails Pareto efficiency. Why?2. Among the topics listed below, choose any two journal articles we discussedin class. Spell out their models and assumptions. Discusstheir results and main contributions.(a) Tournament Contracts;(b) Migration(c) Job Choice(d) Signalling(e) Wage Differentials3. Answer the following related questions:(a) Workers (or tenants in the agricultural sector) may be offered wagecontracts, share contracts, or even fixed-rent contracts. Discusstheir pros and cons. Lay out the conditions under which fixedrentcontracts are optimal, assuming that workers are risk averseand firms are risk neutral.(b) Assume that workers vary in their quality. Further assume thatworkers are risk neutral. If your intention is to sort out betterqualityworkers, Which contracts would you choose?(c) Payments can be tied to outputs or inputs. Which one is preferred?Discuss.4. Answer(a) Ohashi’s IER paper shows that firms may not share the cost offirm-specific training and no layoffs may be optimal. What arethe reasons that underlie his results?(b) Under asymmetric information, firms may share costs in generaltraining. Explain it intuitively.

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