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- Publisher
- American Economic Association
- Copyright
- Copyright © 2014 by the American Economic Association
- Subject
- Articles
- ISSN
- 1945-7685
- eISSN
- 1945-7685
- DOI
- 10.1257/mic.6.4.326
- Publisher site
- See Article on Publisher Site
Abstract
Abstract We study optimal contracting in team settings where agents have many opportunities to shirk, task-level monitoring is needed to provide useful incentives, and it is difficult to write individual performance into formal contracts. Incentives are provided informally, using wasteful sanctions like guilt and shame, or slowed promotion. These features give rise to optimal contracts with underperformance, forgiving sanctioning schemes, and endogenous supervision structures. Agents optimally take on more assigned tasks than they intend to complete, leading to the concentration of supervisory responsibility in the hands of one or two agents. (JEL D82, D86, J41, M12, M54 )
Journal
American Economic Journal: Microeconomics – American Economic Association
Published: Nov 1, 2014