American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Monitoring Teams
American Economic Journal: Microeconomics
vol. 16,
no. 3, August 2024
(pp. 134–61)
Abstract
A principal incentivizes a group of agents to work by choosing a monitoring structure and a scheme of performance-contingent rewards. The monitoring structure partitions the set of agents into monitoring teams, each delivering a signal of joint performance. We show that unlike under partial implementation, the principal always exhausts her monitoring capacity to optimally implement work as a unique outcome. Optimal monitoring teams are homogeneous between them: equally sized and with agents allocated in an anti-assortative fashion. Higher-effort-cost agents receive lower rents, and they tend to be monitored more closely than lower-effort-cost agents when the principal's allocation is constrained.Citation
Halac, Marina, Ilan Kremer, and Eyal Winter. 2024. "Monitoring Teams." American Economic Journal: Microeconomics, 16 (3): 134–61. DOI: 10.1257/mic.20220260Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D86 Economics of Contract: Theory
- M54 Personnel Economics: Labor Management
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