2022/05/17 by Iván Marinovic, Martin Szydlowski
Business, Management and Accounting · Decision Sciences · Social Sciences · #Auction Theory and Applications #Corporate Finance and Governance #Experimental Behavioral Economics Studies
paper · doi:10.1111/1756-2171.12412
openalex publication_date 2022/05/17 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/19
Abstract We study monitoring in a continuous‐time career concerns model. A monitor oversees an agent and generates verifiable evidence if the agent shirks. The monitor's ability is uncertain and requires costly investment to maintain. Unpunished shirking reveals that the monitor is ineffective, which discourages the monitor from maintaining her ability. The agent shirks strategically to discourage the monitor, because shirking increases the rate of learning. Term limits reduce the incentive to shirk and long‐serving monitors accept bribes to hide evidence.