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Can Performance Monitoring Solve the Public Services' Principal-Agent Problem?

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  • Whynes, David K

Abstract

The principal-agent problem emerges when agents are permitted discretion in decision-making and adopt strategies counter to principals' interests. The problem can be recognized within many public services and, in theory, can be overcome by the introduction of performance monitoring and tarqeting. Such provisions are presently being introduced into public services in the United Kingdom. However, it can be shown that both the specific nature of the output of service agencies and the form of remuneration offered to employees permits these agencies to adopt counterstrategies. In consequence, monitoring and targeting are unlikely to result in superior outcomes for the principal. Copyright 1993 by Scottish Economic Society.

Suggested Citation

  • Whynes, David K, 1993. "Can Performance Monitoring Solve the Public Services' Principal-Agent Problem?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(4), pages 434-446, November.
    • Handle: RePEc:bla:scotjp:v:40:y:1993:i:4:p:434-46
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    Cited by:

    1. Sandro Casal & Antonio Filippin, 2024. "The effect of observing multiple private information outcomes on the inclination to cheat," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 543-562, April.
    2. Cavalluzzo, Ken S. & Ittner, Christopher D., 2004. "Implementing performance measurement innovations: evidence from government," Accounting, Organizations and Society, Elsevier, vol. 29(3-4), pages 243-267.

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