Schindler, Dirk (contributor); Weigert, Benjamin (contributor) - 2007
nents. Thus, we have
E[U] = U1(1−e)+p(e,E)·U2(CH,1−H)+[1−p(e,E)]·U2(CL,1−L), (1)
where H = 1 − l2H denotes labor supplied by … maximization problem:
max
{e,H,CH,L,CL}
E[U] = U1(1−e) + p(e,E) ·U2(CH,1−H)
+ [1−p(e,E)] ·U2(CL,1−L) s.t. (2) and (3) (4)
fees are … CL in (4) yields the following first order
conditions:
∂E[U]
∂H = U2C(CH,1−H)·(1−t)wH −U2l2(CH,1−H) = 0, (5)
∂E[U]
∂L = U …