Economics of Incentives: Do workers always work under control?

A) Modeling Hidden Costs of Control

Please explain:

1. if it is not exclusively aimed at a particular agent or

2. if it protects the endowment of the principal.

B) Could you please summarise the following page in an understandable way? Thank you.

Hypothesis 1 Control leads to lower hidden costs in the ROBOT than in the BASELINE treatment.

Hypothesis 2 Control leads to lower hidden costs in the ENDOWMENT than in the BASELINE treatment.

The monetary payoffs:

C) Please explain:

a) 1 A(y, x) = 0 A x for the agent

b) 1 P (y, x) = 0 P + 2 x for the principal.

D) Analysis:

a) Open-door equilibrium

b) Closed-door equilibrium

c) Legitimacy and Hidden Costs