Credibility and Monitoring: Outsourcing as a Commitment Device

Bental, Benjamin, Deffains, Bruno and Demougin, Dominique (2012) Credibility and Monitoring: Outsourcing as a Commitment Device JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, 21 (1). pp. 31-52. ISSN 1058-6407, 1530-9134

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Abstract

We analyze an environment plagued by double moral hazard where the agent's effort level and the principal's precision in monitoring are not contractible. In such an environment, the principal tends to over-monitor thereby inducing low effort. To ease the latter problem, the principal may choose to increase monitoring costs by outsourcing the activity. As a result equilibrium monitoring is reduced and incentives become more powerful. This choice is particularly likely when the worker's effort is an important factor in determining output. © 2012 Wiley Periodicals, Inc.

Item Type:	Article
Additional Information:	## TULIP Type: Articles/Papers (Journal) ##
Uncontrolled Keywords:	38 Economics, 3801 Applied Economics, 3803 Economic Theory
Depositing User:	Symplectic Admin
Date Deposited:	03 Mar 2017 08:24
Last Modified:	22 May 2026 23:27
DOI:	10.1111/j.1530-9134.2011.00327.x
Related Websites:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3006177
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