Journal Articles

Time constraints and the opportunity costs of oversight

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In a principal–agent relationship, how should principals budget time for oversight when
oversight activity is not instantaneous? We develop a formal model of resource allocation by a
principal monitoring multiple agents, where the principal faces a dynamic budgeting problem.
Our model reveals a tension between the value of holding resources in reserve to maintain the
threat of an audit and the direct policy gains of monitoring activity. We show that as the
frequency of principal–agent conflict increases, there are some conditions under which the most
effective strategy for a principal is to allocate less and less of their total time to monitoring. The
model has important implications for the empirical analysis of a monitoring setting where a
principal oversees multiple agents.

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Detail Information

Series Title

Journal of Theoretical Politics

Call Number

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Publisher

Thousand Oaks, CA : Sage Publications., 2016

Collation

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Language

English

ISBN/ISSN

0951-6298

Classification

NONE

Content Type

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Media Type

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Carrier Type

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Edition

Volume 28, Issue 3, July 2016; pp. 431–460

Subject(s)

Monitoring
compliance
oversight
time constrants

Specific Detail Info

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Statement of Responsibility

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