Buried in Paperwork: Excessive Reporting in Organizations

Roland Strausz ()

Departmental Working Papers from Freie Universität, Fachbereich Wirtschaftswissenschaften

Abstract: This paper explains why a principal may demand too much paperwork from a subordinate: Due to limited liability and moral hazard a principal is unable to appropriate all rents. Internal paperwork allows a more accurate monitoring of the agent and enables the principal to appropriate a larger part of the agent's rent. In her decision the principal disregards the agent's cost increase of more internal paperwork. Consequently, the requested amount of internal paperwork may be too high from both the agent's personal point of view and the organization as a whole.

Keywords: principal-agent theory; mechanism design; deterministic mechanisms; randomization. (search for similar items in EconPapers)
JEL-codes: D82 L23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe
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http://userpage.fu-berlin.de/%7Elsbester/papers/paperwork.pdf (application/pdf)

Related works:
Working Paper: Buried in Paperwork: Excessive Reporting in Organizations (2004)
Journal Article: Buried in paperwork: Excessive reporting in organizations (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:bef:lsbest:021

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