Bosses who deliberately choose to ignore their employees' misconduct end up with more cooperative and successful teams than those who monitor closely.
In a series of experiments, researchers found that 'strategic non-monitoring' functions as a form of trust-based gift-giving. Employees respond to a leader's decision to 'turn a blind eye' with increased loyalty and reciprocity, creating a more stable and cooperative environment than a system of constant surveillance.
Turning a Blind Eye: Experimental Evidence on Strategic Non-monitoring
SSRN · 6468578
Monitoring and punishment are commonly used to deter opportunistic behavior, and standard economic reasoning suggests that principals should acquire as much information as possible about agents' actions. Yet leaders often deliberately refrain from investigating potential misconduct. This paper studies such strategic non-monitoring in a laboratory experiment. A principal ("king") can costlessly investigate an agent's ("general's") action that benefits the agent at the principal's expense. Investi