Job Market Paper:
- “Monitor or Trust? Evidence form Liberia’s Trucking Firms”
According to the standard principal-agent theory, stronger monitoring always predicts higher effort. This paper shows evidence that when principal-agent contracts are relational in nature, stronger monitoring is not always optimal. I conduct an experiment where I offer managers of Liberian trucking companies free GPS tracking devices for randomly-selected trucks. These devices enable the manager to know the position of the truck in real time. The experiment shows that monitored drivers complete their tasks significantly faster. However, even a year after the offer, managers refuse to install the GPS tracking devices on some selected trucks and the take-up rate is surprisingly low. I show that this result is consistent with the “crowding-out” mechanism: stronger monitoring can be counterproductive for some agents. For agents that value social esteem – the principal’s opinion about them – monitoring is a signal of distrust which crowds out their effort. In this case, trust acts as a substitute for monitoring and monitoring is only optimal for low levels of trust. I present results that are consistent with this interpretation. In particular, I show that managers decide to install GPS tracking devices only on drivers that they trust the least. Finally, I show that the increase in speed of drivers that the managers chose to monitor is projected to decrease marginal costs incurred by the firm.
Work in Progress:
- “Ethnicity, Expected Discrimination, and Effort: Evidence from Liberian Firms”, with Jonas Hjort
- “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.