Employee Privacy and the Theory of the Firm
14 Pages Posted: 10 Jan 2006
Bruce Kobayashi and Larry Ribstein apply the theory of the firm to worker privacy with specific application to the employer's ability to monitor employee performance and behavior. They take the theory to drive toward a much reduced role for law in favor of regulation by contract. This essay unpacks their theory. It faults the theory for its failure to come to grips with the possibility of monopsony in the labor market, its failure to appreciate the public goods nature of privacy policies and the related assumption that the employer's ability to adopt and apply privacy-invasive policies is invariably a product of a consensual arms-length bargain.
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