Optimal supervision intensity, collusion, and the organization of work

Mehmet Bac

Canadian Journal of Economics, 2007, vol. 40, issue 1, 317-339

Abstract: The intensity of supervision, defined as the proportion of supervisors to bottom-rank productive workers, differs widely across organizations and nations. Analysing three monitoring systems that differ in their supervision intensity, I show that the possibility of collective shirking arrangements can impose a system-dependent limit on the range of implementable performances. This brings about a tradeoff in the choice of the monitoring system: the system that economizes on incentive costs may implement an inferior range of performances. Applications of the model generate work-disutility-, ethics- and job-characteristics-based explanations for variations in the intensity of supervision.

JEL-codes: D73 K42 (search for similar items in EconPapers)
Date: 2007
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