Does monitoring decrease work effort?: The complementarity between agency and crowding-out theories

David Dickinson and Marie Claire Villeval

Games and Economic Behavior, 2008, vol. 63, issue 1, 56-76

Abstract: Agency theory assumes that tighter monitoring by the principal should motivate agents to increase their effort, whereas the "crowding-out" literature suggests that the opposite may occur. These two assertions are not necessarily contradictory provided that the nature of the employment relationship is taken into account [Frey, B., 1993. Does monitoring increase work effort? The rivalry between trust and loyalty. Econ. Inquiry 31, 663-670]. Results from controlled laboratory experiments show that many principals engage in costly monitoring, and most agents react to the disciplining effect of monitoring by increasing effort. However, we also find some evidence that effort is crowded out when monitoring is above a certain threshold. We identify that both interpersonal principal-agent links and concerns for the distribution of output payoff are important for the emergence of this crowding-out effect.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (137)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899-8256(07)00136-4
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories (2005)
Working Paper: Does Monitoring Decrease Work Effort ? The Complementarity Between Agency and Crowding-Out Theories (2004)
Working Paper: Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories (2004)
Working Paper: Does Monitoring Decrease Work Effort? The Complementary between Agency and Crowding-Out Theories (2004)
Working Paper: Does Monitoring Decrease Work Effort ? The Complementarity Between Agency and Crowding-Out Theorie (2004)
Working Paper: Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories (2004)
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:eee:gamebe:v:63:y:2008:i:1:p:56-76

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().