Suppose that you are a manager. You are considering whether or not to monitor employees with the payoffs in the normal-form game shown below. What should the manager do to solve the shirking problem?
A) Always monitor.
B) Never monitor.
C) Sincerely tell workers not to shirk.
D) Engage in "random" spot checks of the workplace.

Question

Suppose that you are a manager. You are considering whether or not to monitor employees with the payoffs in the normal-form game shown below.  What should the manager do to solve the shirking problem?
A) Always monitor. 
B) Never monitor. 
C) Sincerely tell workers not to shirk. 
D) Engage in "random" spot checks of the workplace.

Quizplus · Accepted Answer

The best option for the manager is to engage in "random" spot checks of the workplace. This is because if the manager always monitors, it may lead to resentment and decrease in morale among the employees. On the other hand, if the manager never monitors, it may lead to shirking behavior among the employees. Sincerely telling workers not to shirk may not be enough to ensure their compliance, as there is no guarantee that all employees will act in good faith. Random spot checking strikes a balance between monitoring and trust, and it introduces an element of uncertainty, making it less likely for employees to shirk.

Suppose That You Are a Manager