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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
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Related works:
Working Paper: Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories (2005) Downloads
Working Paper: Does Monitoring Decrease Work Effort ? The Complementarity Between Agency and Crowding-Out Theories (2004) Downloads
Working Paper: Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories (2004) Downloads
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) Downloads
Working Paper: Does Monitoring Decrease Work Effort? The Complementarity Between Agency and Crowding-Out Theories (2004) Downloads
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