Recall from the chapter the discussion of the oil drillers from the former Soviet Union who won a production competition based on the number of meters drilled. Those drillers determined that the first 100 meters of drilling were the easiest, so they simply drilled dry wells that never exceeded 100 meters in depth. Naturally, management would be upset when the drillers’ tactics were exposed. After all, management’s objective was to drill wells and find oil.
1. Can you suggest to management an incentive system that would have prevented such behavior and would instead encourage the desired behavior?
2. Do you consider what the drillers did to be wrong or smart?