summary measure myopia in a profit center Return to problem 9 above and ease [e] where a profit center is used. Suppose instead of eontracting on eost and revenue, the parties eontract on profit itself, or revenue lesseost. Determine an optimal-pay-for-performance arrangement; eontrast it with the one determined earlier.

What does this imply about heavy reliance on a summary measure of performance, such as profit in a profit center or return on investment in an investment center?

AppendixLO1