Information Structures and the Delegation of Monitoring

Pau Olivella

Annals of Economics and Statistics, 1995, issue 39, 1-32

Abstract: If the owner of a firm cannot commit ex-ante to monitor his workers and the monitoring technology may accuse a diligent worker of shirking (produce a "false positive"), the lack of commitment problem is extremely severe : the worker may shirk even if monitoring is costless. However, the same presence of false positives is necessary for this commitment problem to be fully resolved either through delegation of monitoring or through contracting with a passive third party.

Date: 1995
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Related works:
Working Paper: Information Structures and the Delegation of Monitoring (1993)
Working Paper: Information Structures and the Delegation of Monitoring (1989)
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