AN INCENTIVE SCHEME DESIGN FOR LONG-TERM CONTRACTOR COOPERATION
In bid invitation, the project owner is interested in deploying the contract mechanism that will secure reliable service at the cheapest cost and best quality.On the other hand, the contractor bidding for the project is interested in winning the contract at a price that assures him a reasonable profit margin.This paper develops a game-theoretic model which studies the contract design problem of the project owner when it faces with a contractor whose quality of service and the cost of providing the service are private information to the owner.We apply the Revelation Principle to our analysis and characterize the optimal contract The result shows that the project bid works best when offered to the contractor with high capability includes either a penalty scheme or a gain-sharing scheme, and the contract offered to the contractor with low capability includes only premium.Furthermore, the more attractive the gain-sharing scheme, or alternatively, the more severe the penalty is, the less the initial remuneration is and vice versa.Finally, the paper proves that for the high and media capability contractors, the proposed optimal contract is independent of the ex-ante beliefs which the owner has on the capability and the cost of the contractor.
Game theory Project bid Revelation principle Scheme design Contractor Cost
BAI-CHEN XIE YU-HUA WU YING-ZHI DENG
School of Management, Ph.D of Management Science and Engineering, Tianjin University, Tianjin 300072 School of Management, Ph.D Candidate Supervisor, Vice President of ORSC, Tianjin University, Tianjin Second Technical College of Shandong Province, Liaocheng 252000, China
国际会议
2007 International Conference on Machine Learning and Cybernetics(IEEE第六届机器学习与控制论国际会议)
香港
英文
2290-2295
2007-08-19（万方平台首次上网日期，不代表论文的发表时间）