Economics, Finance and Quantitative Analysis

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Standard neoclassical principal-agent theory predicts that stricter monitoring should reduce employee shirking from principal desires; however, recent analyses indicate that social aspects of principal-agent relationships may result in monitoring “crowding out” disciplinary effects. From 2001 to 2008 Major League Baseball (MLB) instituted an automated pitch-tracking system (QuesTec) to assist in monitoring its umpires. The asymmetric implementation of this new monitoring technology allows for the comparison of monitored and unmonitored umpires to identify shirking to placate on-field lobbying pressure. Estimates identify deviations in calls associated with monitoring; however, overall, umpires appeared to be quite sensitive to league directives for changes in the strike zone absent technological monitoring. Thus, while additional monitoring had some effect on umpire behavior, the extreme sensitivity to MLB mandates when unmonitored by the new technology indicates that pre-existing monitoring (which included human oversight and efficiency wages) was effective at limiting shirking by umpires.