Information asymmetries make contracting difficult within firms. Standard principal-agent theory predicts that monitoring should unambiguously raise workers’ effort. I test this prediction using a field experiment with Liberian trucking companies. Results show that drivers who are experimentally monitored provide more effort on average. However, a key finding is that this effect is heterogeneous across drivers: some drivers provide less effort as a result of monitoring and managers are therefore reluctant to monitor them. I discuss why this might be and show that decreasing effort may be a way for drivers to retaliate against the manager’s decision to monitor them.
- Informational Barriers to Market Access: Experimental Evidence from Liberian Firms, with and Vinayak Iyer and Jonas Hjort, submitted
Evidence suggests that firms in poor countries stagnate because they cannot access growth-conducive markets. We hypothesize that overlooked heterogeneity in marketing ability distorts market access. To investigate, we gave a random subset of Liberian firms vouchers for a week-long program that teaches how to sell to corporations, governments, and other large buyers. Firms that participate win about three times as many contracts, but only firms with access to the Internet benefit. We use a simple model and variation in online and offline demand to show evidence that this is because ICT dampens traditional information frictions, but not marketing barriers.
Work in Progress:
- “Is Liberia Getting Globalized? Estimating Intra-national Trade Costs in Liberia”
- “Fraud Risks and Customs Bonded Warehouse in Tunisia”, with Lotfi Ayadi and Gaël Raballand, Global Trade and Customs Journal (2015) 10, Issue 11/12, pp. 417-425.
“The Trucking Industry and the Price of Commodities in Liberia”, Chapter for Liberia Development Conference Anthology: Engendering Collective Action for Advancing Liberia’s Development (2017), Monrovia, Liberia: USAID/Liberia, Embassy of Sweden and University of Liberia: pp. 341-352.