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Shirking, Monitoring, and Risk Aversion

  • Seeun Jung

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

  • Kenneth Houngbedji

    (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

This paper studies the effect of risk aversion on effort under different monitoring schemes. It uses a theoretical model which relaxes the assumption of agents being risk neutral, and investigates changes of effort as monitoring varies. The predictions of the theoretical model are tested using an original experimental setting where the level of risk aversion is measured and monitoring rates vary exogenously. Our results show that shirking decreases with risk aversion, being female, and monitoring. Moreover, monitoring is more effective to curtail shirking behaviors for subjects who are less risk averse, although the size of the impact is rather small.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00965532.

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Date of creation: May 2014
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Handle: RePEc:hal:psewpa:halshs-00965532
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