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There is a long tradition of this sort of payment. [1] I have run across it in industrial settings, particularly where the industry or its management were strongly influenced by Taylorism. [2] However, if quality standards aren't easily achieved by standard work, it can be highly dysfunctional.

[1] https://en.wikipedia.org/wiki/Piece_work

[2] https://en.wikipedia.org/wiki/Scientific_management

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