According to a corporate customer, "hourly charging shifts economic incentives in the incorrect direction." (a) What did the customer imply by this statement? (b) Does the statement make sense? (c) Will hourly billing inevitably cause incentives that are counterproductive?

According to a corporate customer, "hourly charging shifts economic incentives in the incorrect direction." (a) What did the customer imply by this statement? (b) Does the statement make sense? (c) Will hourly billing inevitably cause incentives that are counterproductive?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 21.2IP

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According to a corporate customer, "hourly charging shifts economic incentives in the incorrect direction."

(a) What did the customer imply by this statement?

(b) Does the statement make sense?

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