If the firm hires a player other players do not like, those employees with a taste for discrimination will view their wage to be:
A) wd
B) w * (1 - d)
C) w/(1 + d)
D) w

Question

Quizplus · Accepted Answer

If some employees discriminate against the hired player, it means that they value their own identity within the company more than the firm's profits. Therefore, the discriminatory employees will reduce their effort and productivity, and as a result, their wage will be reduced in accordance with the firm's profit-maximizing behavior. The firm will pay a wage discounted by the discrimination parameter, d. Therefore, the discriminatory employees' wage will be w*(1-d).

If the Firm Hires a Player Other Players Do Not