The relative effectiveness depends on the degree of outcome and effort measurability, as well as the level of task programmability.
Information requirements: Outcome control requires less detailed information about the work process itself. Effort control requires more granular information about how work is being performed.
The focus of control: Outcome control focuses on measuring and rewarding the results or outputs of work. Effort control focuses on monitoring and directing the behaviors and actions taken.
Autonomy: Outcome control generally allows agents more autonomy in how they achieve results. Effort control involves more direct oversight and direction of agent activities.
Applicability: Outcome control is more suitable when outcomes are easily measurable and attributable to individual effort. Effort control is more appropriate when outcomes are difficult to measure or influenced by factors outside the agent's control.
Incentive structure: Outcome control ties rewards directly to measurable results. Effort control bases rewards on observed behaviors and inputs.
Risk allocation: Outcome control shifts more risk to the agent, as they are held accountable for results. Effort control keeps more risk with the principal, as they direct the work process.
Information asymmetry impact: Outcome control can help mitigate information asymmetry by focusing on observable results. Effort control attempts to reduce information asymmetry by increasing monitoring of the agent's actions.
The choice between outcome and effort control mechanisms should be based on the specific context, nature of the task, and the extent of information asymmetry in the principal-agent relationship. In some cases, a combination of both approaches may be optimal. The relative effectiveness depends on the degree of outcome and effort measurability, as well as the level of task programmability.
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