You work for a hotel chain that is considering expanding into international mark

Question

You work for a hotel chain that is considering expanding into international markets and you are looking for the right person to help oversee that process. You identify a top employee at another firm who seems to have exactly the skill set needed to help your company succeed. You know she currently earns $250,000. You offer her $300,000. In the following scenarios, answer whether or not the firm is likely to end up a victim of the winner’s curse, and give a short explanation. a. Her productivity, unbeknownst to you, is $275,000. b. She works for a company that manufactures apparel that recently drastically down-­sized. c. Her current skill set is largely firm specific capital. d. She recently went back to school and earned a masters degree and now seems over-­qualified for her current position.

Explanation / Answer

winner curse is winning but paying more than receiving like in a auction of $1 people tend to buy that $! fore more than its value.

a) yes the firm is likely to end up as a victim because paying more than value.

b)yes because the firm downsized i.e demand is shrinking for the firm and moreover that was apparel manufacturing company

c)may be not. because in the hotel chain also she can work in that capital department.

d)no. if she does not demand a hike because of over qualified . more qualification can lead to more productivity i.e firm can gain.

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