Financial Times FT.com

Dear Economist...

Published: September 1 2007 01:23 | Last updated: September 1 2007 01:23

Dear Bob,

It is certainly possible to pay people for performance and get good results for your trouble. In one case that has become famous among economists, a company that replaced cracked windscreens switched from paying workers by the hour to paying workers by the windscreen, with a penalty for repairs that later failed. Slow workers quit, fast workers worked yet faster, and faulty installations fell.

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