The Spillover Effects of Monitoring: A Field Experiment

We provide field experimental evidence of the effects of monitoring in a context where productivity is multidimensional and only one dimension is monitored and incentivized. We hire students to do a job for us. The job consists of identifying euro coins. We study the direct effects of monitoring and penalizing mistakes on work quality and evaluate spillovers on unmonitored dimensions of productivity (punctuality and theft). We find that monitoring improves work quality only if incentives are harsh, but substantially reduces punctuality irrespectively of the associated incentives. Monitoring does not affect theft, with 10% of participants stealing overall. Our findings are supportive of a reciprocity mechanism, whereby workers retaliate for being distrusted.

Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2089.

This paper was accepted by Uri Gneezy, behavioral economics.