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Monitoring and Prudence

Author

Listed:
  • Beltrametti, Luca

    (University of Genova)

  • Cardullo, Gabriele

    (University of Genova)

Abstract

We study the impact of monitoring in a workplace context where both firms and employees are unable to perfectly observe the individual worker contribution to total output. Therefore, in our setting monitoring is not aimed at reducing information asymmetries but still affects effort and output. We show that if individuals are prudent, firms call for less monitoring. Workers' stance towards monitoring is ambiguous and depends on risk aversion and the disutility of effort. Our "prudence effect" offers some clues for a more nuanced interpretation of the attitudes towards monitoring by firms and workers.

Suggested Citation

  • Beltrametti, Luca & Cardullo, Gabriele, 2024. "Monitoring and Prudence," IZA Discussion Papers 17000, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp17000
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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