| Article ID: | iaor1997532 |
| Country: | United States |
| Volume: | 42 |
| Issue: | 1 |
| Start Page Number: | 151 |
| End Page Number: | 156 |
| Publication Date: | Jan 1996 |
| Journal: | Management Science |
| Authors: | Bushman Robert, Kanodia Chamdra |
| Keywords: | statistics: sampling |
This paper studies sample design for process control in principal-agent settings where deterrence rather than ex post detection is the main issue. The authors show how the magnitude of gains from additional sampling can be calculated and traded off against sampling costs. It is shown that the optimal sample size shrinks as target defect rates are lowered.