On monitoring timing in hierarchies

Authors

  • Walter Cont

Keywords:

herramientas de monitoreo, JEL: D82, L23

Abstract

In a principal-monitor-agent model we show that the principal's choice of the timing to monitor the agent presents a trade-off. On the one hand, a signal from an ex ante monitor (supervisor) provides flexibility in contracting (since both output and wages can be contracted on this signal). On the other hand, a signal from an ex post monitor (auditor) can be used to punish the agent. Auditing is optimal when (i) strong punishment schemes can be implemented and enforced by courts or (ii) when punishment instruments are not expected to be strong and the monitor's signal is noisy. Supervising is optimal otherwise.

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Published

2003-12-30

How to Cite

Cont, . W. (2003). On monitoring timing in hierarchies. Económica, 49, p. 21–54. Retrieved from https://revistas.unlp.edu.ar/Economica/article/view/8509

Issue

Vol. 49 (2003)

Section

Articles

License

The material published in the journal is distributed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) license. This license requires proper credit to be given, a link to the license to be provided, and changes to be indicated. It does not permit commercial use of the work, and if the work is remixed, transformed, or otherwise modified, distribution of such modification is not allowed.