Credibility and Monitoring: Outsourcing as a Commitment Device

B-Tier
Journal: Journal of Economics & Management Strategy
Year: 2012
Volume: 21
Issue: 1
Pages: 31-52

Authors (3)

Benjamin Bental (not in RePEc) Bruno Deffains (not in RePEc) Dominique Demougin

Score contribution per author:

0.673 = (α=2.02 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We analyze an environment plagued by double moral hazard where the agent’s effort level and the principal’s precision in monitoring are not contractible. In such an environment, the principal tends to over‐monitor thereby inducing low effort. To ease the latter problem, the principal may choose to increase monitoring costs by outsourcing the activity. As a result equilibrium monitoring is reduced and incentives become more powerful. This choice is particularly likely when the worker’s effort is an important factor in determining output.

Technical Details

RePEc Handle
repec:bla:jemstr:v:21:y:2012:i:1:p:31-52
Journal Field
Industrial Organization
Author Count
3
Added to Database
2026-01-25