Endogenous Monitoring in Multiprincipal Model : implications for organizational design

I analyze common agency games with moral hazard in which each principal can endogenously choose the level of monitoring for each agent, and derive some implications for organizational design. I show that even if a principal doesn’t benet from an agent’s work, she has incentive to monitor him by drawing monitoring fee from the principal who benets from the task via the agent in equilibrium. And I show by collecting the monitoring provisions from each principal, the multi-principals organization can create higher incentives and welfare compared with the single-principal one.