Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 9, 2019 erstellt
Beschreibung:
We provide a novel theory of monitoring. A monitor with career concerns oversees an agent and generates verifiable evidence if the agent shirks. The monitor's ability is uncertain and requires costly investment to maintain. The equilibrium features a "slippery slope'': unpunished shirking reveals that the monitor is likely ineffective, encouraging more shirking in the future. The monitor can prevent shirking forever, but instead lets her ability decay, and the agent becomes entrenched. Term limits reduce shirking by curbing the agent's experimentation motive and long-serving monitors accept bribes to hide evidence. The optimal organizational design exploits externalities between multiple agents