Does Monitoring Decrease Work Effort?

David Dickinson (1) , Marie Claire Villeval (2)

1 Department of Economics
2 GATE - Groupe d'analyse et de théorie économique

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 1993). 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.

Mots clés: principal-agent theory; monitoring; crowding-out; motivation; real effort experiment

Domaines: Economies et finances

David Dickinson, Marie Claire Villeval. Does Monitoring Decrease Work Effort?. Games and Economic Behavior, 2008, 63 (1), pp. 56-76. ⟨halshs-00276284⟩