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Optimal supervision intensity, collusion, and the organization of work

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  • Mehmet Bac

Abstract

The intensity of supervision, defined as the proportion of supervisors to bottom-rank productive workers, differs widely across organizations and nations. Analysing three monitoring systems that differ in their supervision intensity, I show that the possibility of collective shirking arrangements can impose a system-dependent limit on the range of implementable performances. This brings about a tradeoff in the choice of the monitoring system: the system that economizes on incentive costs may implement an inferior range of performances. Applications of the model generate work-disutility-, ethics- and job-characteristics-based explanations for variations in the intensity of supervision.

Suggested Citation

  • Mehmet Bac, 2007. "Optimal supervision intensity, collusion, and the organization of work," Canadian Journal of Economics, Canadian Economics Association, vol. 40(1), pages 317-339, February.
  • Handle: RePEc:cje:issued:v:40:y:2007:i:1:p:317-339
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    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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