Risk Attitudes and Shirking on the Quality of Work under Monitoring: Evidence from a Real-Effort Task Experiment

This paper studies the effects of risk attitudes on effort exerted under different monitoring schemes. Our design employs a theoretical model that relaxes the assumption that agents are risk neutral and investigates changes in the effort and quality of work as monitoring varies. The predictions of the theoretical model are tested in an original experimental setting in which levels of risk attitudes are measured and monitoring rates vary exogenously. Our results show that shirking decreases with risk aversion, being female, and monitoring. Moreover, monitoring is more effective at curtailing shirking behaviors with subjects who are less risk averse, although the size of the impact is small.