All-or-Nothing Monitoring | Zendy

Rui Zhao | Zendy

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All-or-Nothing Monitoring

Author(s) -

Rui Zhao

Publication year - 2008

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.98.4.1619

Subject(s) - principal (computer security) , nothing , incentive , task (project management) , economics , simple (philosophy) , action (physics) , microeconomics , mathematical economics , computer science , philosophy , epistemology , management , computer security , physics , quantum mechanics

A principal can observe both the output and input of an agent who works at a job involving multiple tasks. We provide a simple theory that explains why it may be optimal for the principal to use only an output-based incentive contract, even though the principal can monitor the agent's actions perfectly in all but one task and knows exactly which action is optimal for each task. (JEL D82, D86, M54)

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