Gaming behaviors in performance measurement are prevalent in the public sector causing information distortion and impeding substantive improvement. We develop a model of how agents’ gaming behaviors are elicited and relived by incentives and monitoring and identify three paths of effects that jointly determine agents’ choices between efforts or gaming, namely incentive effect, monitoring effect, and parallel effect. We use China’s national inspection on environmental protection as a case and measure the extent of gaming by examining the discrepancy between reported air pollution and satellite data. Empirical findings support our theoretical predictions that each of the three effects has a unique impact on the equilibrium relations between efforts and gaming. And their joint function can produce a situation where real efforts and gaming both increase, as indicated by a decrease in the actual level and a wider gap between reported and actual levels, respectively. These results implicate a fine-tuned balance between incentives and monitoring for performance management in public organizations.