, Volume 14, Issue 2, pp 241-253

On the incentive effects of monitoring: evidence from the lab and the field

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Abstract

Several experimental studies have shown that the crowding-out effect of monitoring may outweigh its disciplining effect through intrinsic motivation destruction, thereby reducing effort. However, most of these experiments use numeric effort tasks that subjects may not be intrinsically motivated to complete. This paper aims to analyze the incentive effects of monitoring using a real-effort task for which intrinsic motivation is more likely to exist. We conducted two similar experiments, in the lab in Montreal and in the field in Ouagadougou. In contrast to the lab, subjects in the field are unaware they are taking part in an experiment.

The following results are observed both in the lab and in the field. Relative to the baseline treatment, we find that our two monitoring treatments significantly increase effort, in line with agency theory. However, effort levels are not significantly different between the monitoring treatments. Finally, increasing the subjects’ wage is found to have no effect on effort.

I am indebted to the editor and two anonymous referees for helpful comments. I would like to thank Jim Engle-Warwick, Gérard Gaudet, Julie Héroux, Abraham Hollander, Claude Montmarquette, and participants at the ESA 2008 European Meeting in Lyon. I am particularly indebted to Olivier Armantier. All remaining errors are mine. The views expressed herein are those of the author and do not necessarily reflect the views of the United Nations Industrial Development Organization.