I have a company and I have to set the wage to my employer based on different levels of revenues. Examples
W_1
if Revenue = 100k
w_2
if Revenue = 200k
w_3
if Revenue = 300k
I know how to solve this problem analytically, but I don't know how, in practice I will estimate the Utility function of the agent. In book they say it's
$ U(w,s) = \sqrt{w} - s $
where $w$ is wage, and $s$ is their efforts. How do I apply this in pratice?