How Monitoring Influences Trust: A Tale of Two Faces

Posted: 24 Jul 2012

See all articles by Maurice E. Schweitzer

Maurice E. Schweitzer

University of Pennsylvania - Operations & Information Management Department

Teck Ho

University of California, Berkeley - Haas School of Business

Date Written: July 24, 2012

Abstract

Organizations operate more effectively when managers trust their employees. In many cases, however, managers and their employees have divergent interests. One common managerial approach to address the problem of misaligned incentives involves monitoring employee behavior. In this paper, we investigate how monitoring changes the behavior of both those who are monitored and those who monitor others. We paired participants in a repeated trust game with a stochastic ending in which we manipulated both the frequency of monitoring and whether or not monitoring was anticipated. When trustees who were monitored could anticipate monitoring, they engaged in strategic behavior; trustees chose self-interested actions when they anticipated that they would not be monitored, but chose altruistic actions when they anticipated that they would be monitored. Trustors, however, failed to appreciate how strategically their counterparts would act. Though trustors were more trusting when they could monitor their counterpart than when they could not, they were still much too trusting when their inability to monitor their counterpart was anticipated. We discuss managerial implications of these results for designing and using monitoring systems.

Keywords: trust, monitoring

JEL Classification: C7, C9

Suggested Citation

Schweitzer, Maurice E. and Ho, Teck, How Monitoring Influences Trust: A Tale of Two Faces (July 24, 2012). Available at SSRN: https://ssrn.com/abstract=2116571

Maurice E. Schweitzer (Contact Author)

University of Pennsylvania - Operations & Information Management Department ( email )

Philadelphia, PA 19104
United States
215-898-4776 (Phone)
215-898-3664 (Fax)

Teck Ho

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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