I Think Scott Adams May Have Inadvertently Solved the Monitoring Problem…

One of the main topics in organizational economics (and economics in general I suppose) is the principal-agent problem– i.e. the misalignment of incentives between one party and another party enlisted to do the first party’s bidding. For example, a small-business owner hires an employee to run things and maximize profit for the owner, but a self-interested employee who is paid a fixed salary would likely rather check Facebook then do whatever it is that would be in the owner’s best interest. (Here’s another great empirical example involving real-estate agents.) This isn’t a criticism of the employee, just a descriptive observation, but it is the starting point for an entire line of research on ways to mitigate the inefficiency created by the principal-agent problem- essentially, the economic version of “if you want something done right, do it yourself.”

Most economists focus their attention on various incentive (i.e. pay for performance) schemes, partly because they are interesting and partly because there is a general consensus that, in a lot of situations, simply hiring managers to monitor the workers and make sure that they do their jobs is an overly costly and/or ineffective solution. Think about it- if the employee doesn’t have the proper incentives to work rather than check Facebook, why would the manager have the proper incentives to monitor employees rather than check Facebook? I guess you could hire another manager to monitor the first manager, but that both adds to cost and just shifts the same problem up one more level. In order for the monitoring solution to work, the owner has to be the ultimate monitor, which largely defeats the purpose of hiring others to work on his behalf in the first place.

That said, I think Scott Adams may have stumbled upon a solution to the monitoring problem:

I guess this could work until our robot overlords get sophisticated enough to get on Facebook and start defying orders- so like 5 years maybe? I feel like my Alexa has already has already made significant progress on the latter front at least.

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