If his relaxation cannot be detected perfectly
at zero cost, part of its effects will
be borne by others in the team, thus making
his realized cost of relaxation less than
the true total cost to the team. The difficulty
of detecting such actions permits
the private costs of his actions to be less
than their full costs. Since each person
responds to his private realizable rate of
substitution (in production) rather than
the true total (i.e., social) rate, and so
long as there are costs for other people to
detect his shift toward relaxation, it will
not pay (them) to force him to readjust
completely by making him realize the
true cost. Only enough efforts will be
made to equate the marginal gains of detection
activity with the marginal costs of
detection; and that implies a lower rate of
productive effort and more shirking than
in a costless monitoring, or measuring,
world.