How Often Should you Open the Door? Optimal Monitoring to Screen Heterogeneous Agents
Andrea Ichino and
No 4255, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This Paper shows that over monitoring a partner in the initial phase of a relationship may not be optimal if the goal is to determine loyalty and if the cost of ending the relationship increases over time. This intuition is simple: by monitoring too much we lose the opportunity to learn how the partner will behave when not monitored. Only by allowing the partner the possibility to misbehave is there a chance to determine their characteristics at a time when separation would be possible at a relatively low cost.
Keywords: asymmetric information; effort; M50; monitoring; probation (search for similar items in EconPapers)
JEL-codes: D20 D80 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
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Journal Article: How often should you open the door?: Optimal monitoring to screen heterogeneous agents (2008)
Working Paper: How often should you open the door? Optimal monitoring to screen heterogeneous agents (2004)
Working Paper: How Often Should You Open the Door? Optimal Monitoring to Screen Heterogeneous Agents (2004)
Working Paper: How often should you open the door? Optimal monitoring to screen heterogeneous agents (2003)
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