featuring Dr. John Zhu from Yale University
"Better Monitoring...Worse Productivity"
Abstract: Changing workplace demands are driving managers to collect more information and provide more feedback about worker performance than ever before. Despite obvious benefits, concerns persist about how all this information (much of which is non-contractible and must pass through discretionary feedback) might distort incentives. I highlight a better monitoring/worse outcome channel that speaks to these concerns. Some improvements to the informativeness of monitoring tempt managers to provide excessive negative feedback leading to overpunishment. Workers then refuse to accept contracts that do not severely constrain the size of the punishment threat. Without a serious punishment threat, effort and surplus decline.
Free and open to the public. For more information, contact Tannista Banerjee at firstname.lastname@example.org.