Obstructive monitoring

Aaron Finkle and Dongsoo Shin ()

Journal of Economics & Management Strategy, 2020, vol. 29, issue 4, 873-891

Abstract: We consider a principal–agent relationship in which the principal's monitoring can be obstructive to the agent, reducing the agent's productivity. We show that, with obstructive monitoring, the optimal output schedule is distorted in all directions—the high‐cost agent produces less, and the low‐cost agent produces more than the first‐best levels. Moreover, if the principal has a choice, she will make monitoring deliberately obstructive, because when monitoring is obstructive, although the agent's productivity decreases, his information rent is extracted more effectively. We also show that obstruction is optimal even when the principal is unable to commit to her monitoring strategy ex ante.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/jems.12386

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:29:y:2020:i:4:p:873-891

Ordering information: This journal article can be ordered from
http://www.blackwell ... ref=1058-6407&site=1

Access Statistics for this article

More articles in Journal of Economics & Management Strategy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().