interacting eontrol problems Retum to the setting of Table 22.2, and concentrate on the first case where two of the type one tasks are assigned to a single manager.

a] Drawthe manager's decision tree and verify the managercan do no betterthan accept the contract terms and supply input H to both tasks (i.e., supply HH).

b] Suppose the manager can delay choice between H and L for the second task until the output from the first task is observed. Using the noted pay-for-performance arrangement, can the manager be counted on to supp ly input H to the second task?

e] Find an optimal pay -for-performance arrangement for the situatian in [b] above where the manager observes the first task's output before supplying input to the second task. Explain the difference between your arrangement and that given in Table 22.2.

AppendixLO1