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Individual accountability in teams

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Author Info

  • Marx, Leslie M.
  • Squintani, Francesco

Abstract

We consider a model of team production in which the principal observes only the team output, but agents can monitor one another (at a cost) and provide reports to the principal. We consider the problem faced by a principal who is prevented from penalizing an agent without evidence showing that the agent failed to complete his assigned actions. We show the first-best (high effort but no monitoring) can be achieved, but only if the principal assigns second-best actions. The principal requires monitoring, but agents do not monitor, and as long as output is high, the principal does not penalize agents who fail to monitor. If the principal has the responsibility for monitoring, the first-best outcome cannot be achieved, thus we identify an incentive for delegated monitoring even when agents have no informational advantage.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 1 (October)
Pages: 260-273

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:1:p:260-273

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Principal-agent problem Delegated monitoring Bilateral contracts;

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References

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Citations

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Cited by:
  1. Ekaterina Goldfayn, 2006. "Organization of R&D With Two Agents and Principal," Bonn Econ Discussion Papers bgse3_2006, University of Bonn, Germany.
  2. Joeri Sol, 2010. "Peer Evaluation: Incentives and Co-Worker Relations," Tinbergen Institute Discussion Papers 10-055/1, Tinbergen Institute.

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