Question: Suppose that an employee has two tasks to performassembling machinery and evaluating quality. Suppose that the supervisor can only observe how many machines have been

Suppose that an employee has two tasks to perform—assembling machinery and evaluating quality. Suppose that the supervisor can only observe how many machines have been assembled by the worker. Is a hierarchical firm structure necessary under this situation? Under what conditions should the principal closely tie pay to performance on the first task?

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