9. Stories about suboptimization issues abound in some formerly centrally planned national economies in which the output of factories was measured by seemingly useful measures, with unexpected and disastrous results.

Specifically, a ball-bearing factory’s output was measured by the total weight of the ball bearings produced, so the plant manager decided to produce one very large ball bearing each month. There was a shoe factory where output was measured by the number of left shoes, so the plant manager decided to make only left shoes to double the factory’s official output. Explain in detail how the measure of the result variable (output) of a subsystem can contribute to bad decisions that lead to suboptimized results for the entire system and what the consequences might be.

Think in terms of what it means to establish a principle of choice. This is not unique to centrally planned economies but can happen in any organization. Give an example from your personal or professional life in which this happened.