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Buried in Paperwork: Excessive Reporting in Organizations

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  • Roland Strausz

    (Free University of Berlin, Department of Economics)

Abstract

This paper explains why a principal may demand too much paperwork from a subordinate: Due to limited liability and moral hazard a principal is unable to appropriate all rents. Internal paperwork allows a more accurate monitoring of the agent and enables the principal to appropriate a larger part of the agent's rent. In her decision the principal disregards the agent's cost increase of more internal paperwork. Consequently, the requested amount of internal paperwork may be too high from both the agent's personal point of view and the organization as a whole.

Suggested Citation

  • Roland Strausz, "undated". "Buried in Paperwork: Excessive Reporting in Organizations," Papers 021, Departmental Working Papers.
    • Handle: RePEc:bef:lsbest:021
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    File URL: http://userpage.fu-berlin.de/%7Elsbester/papers/paperwork.pdf
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    References listed on IDEAS

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    6. Strausz, Roland, 2006. "Timing of verification procedures: Monitoring versus auditing," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 89-107, January.
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    Cited by:

    1. Strausz, Roland, 2006. "Timing of verification procedures: Monitoring versus auditing," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 89-107, January.
    2. Susanne Ohlendorf & Patrick W. Schmitz, 2012. "Repeated Moral Hazard And Contracts With Memory: The Case Of Risk‐Neutrality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 433-452, May.
    3. Reinshagen, Felix, 2012. "Standards and Incentives under Moral Hazard with Limited Liability," Discussion Papers in Economics 12750, University of Munich, Department of Economics.
    4. Reinshagen, Felix, 2011. "Standards and Incentives in Safety Regulation," Munich Dissertations in Economics 13430, University of Munich, Department of Economics.

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    More about this item

    Keywords

    principal-agent theory; mechanism design; deterministic mechanisms; randomization.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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