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okay so here we have a problem which is a mechanism design problem of the moral hazard flavour where were trying to incentivize behavior and this is a classic manager situation where you have the seat the manager is going to be like a CEO and we as the principal are going to be a board of directors were trying to incentivize the CEO to put forth effort but we cant observe their effort all we can observe is whether or not the project succeeded or failed and heres the set up of the problem and Ill put the actual problem in the doobly-doo below so the profit to the company from a successful project is 1 million the profit to the company from an unsuccessful project is zero and if the manager puts forth effort under if they have good management and we have a 50% chance probability of success so still a pretty high chance of failure if the management is bad we only have a 25% chance of success the effort cost to the manager is 0.1 the managers utility over money where money is measured