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Monitoring Teams

Author

Listed:
  • Marina Halac
  • Ilan Kremer
  • Eyal Winter

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.

Suggested Citation

  • Marina Halac & Ilan Kremer & Eyal Winter, 2024. "Monitoring Teams," American Economic Journal: Microeconomics, American Economic Association, vol. 16(3), pages 134-161, August.
  • Handle: RePEc:aea:aejmic:v:16:y:2024:i:3:p:134-61
    DOI: 10.1257/mic.20220260
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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