smoothing behavior Retum to the problem 9 above. easuaIly, we might interpret the story as one in
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smoothing behavior Retum to the problem 9 above. easuaIly, we might interpret the story as one in whieh the manager receives a bonus when x2 is produced, but no additional reward if even more is produced. Might the manager now be tempted to inventory or otherwise "hide" output in the short-run once enough output has been produced to qualify for the bonus? What (eonvenient) assumption in the simple model removes this possibiIity?
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