A Note on Strategic Sampling in Agencies

Robert Bushman and Chandra Kanodia
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Robert Bushman: Graduate School of Business, University of Chicago, Chicago, Illinois 60637
Chandra Kanodia: Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455

Management Science, 1996, vol. 42, issue 1, 151-156

Abstract: This paper studies sample design for process control in principal-agent settings where deterrence rather than ex post detection is the main issue. We show how the magnitude of gains from additional sampling can be calculated and traded off against sampling costs. It is shown that the optimal sample size shrinks as target rates are lowered.

Keywords: sampling; value of information; agency theory (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:42:y:1996:i:1:p:151-156

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