Shirking, Monitoring, and Risk Aversion

Pre-print, Working paper: This paper studies the effect of risk aversion on effort under different monitoring schemes. It uses a theoretical model which relaxes the assumption of agents being risk neutral, and investigates changes of effort as monitoring varies. The predictions of the theoretical model are tested using an original experimental setting where the level of risk aversion is measured and monitoring rates vary exogenously. Our results show that shirking decreases with risk aversion, being female, and monitoring. Moreover, monitoring is more effective to curtail shirking behaviors for subjects who are less risk averse, although the size of the impact is rather small.

Author(s)

Seeun Jung, Kenneth Houngbedji

Date of publication
  • 2014
Keywords JEL
C91 D61 D81 D86
Keywords
  • Shirking
  • Monitoring
  • Risk under Uncertainty
  • Effort
Internal reference
  • PSE Working Papers n°2014-11
Version
  • 1