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Tuesday, July 21, 2020 | History

2 edition of Unique implementation of incentive contracts with many agents found in the catalog.

Unique implementation of incentive contracts with many agents

Ching-to Ma

Unique implementation of incentive contracts with many agents

by Ching-to Ma

  • 137 Want to read
  • 27 Currently reading

Published by International Centre for Economics and Related Disciplines in London .
Written in English


Edition Notes

Statementby Ching-to Ma.
SeriesTheoretical economics discussion papers -- 146
ContributionsInternational Centre for Economics and Related Disciplines.
ID Numbers
Open LibraryOL16423495M

INCENTIVE CONTRACTS 6oi incentive contract will place a very small weight on total firm value. For this reason, if such firms are to provide incentives, they too must use other performance measures. I model this problem by assuming that the principal's objective, V(e, E), is not contractible. It is a function of e, the actions of the agent. Incentive contracts between principals and agents are fundamental for a wide range of economic and –nancial transactions. Principals apply agency contracts to provide incentives for employees, managers, insurance buyers, attorneys, sales personnel, business representatives, independent con-.

An Incentive for Commercial Items Contracts: A Guest Article for Where in Federal Contracting?. by Vernon J. Edwards. J On April 5, , Deputy Under Secretary of Defense for Acquisition and Technology Dr. Jacques Gansler directed the military departments and defense agencies to make 50 percent of their service contracts performance-based by the year . Incentive Contracts for Teams: Experimental Evidence Claudia M. Landeoyand Kathryn E. Spierz Abstract This paper reports the results of an experiment on incentive contracts for teams. The agents, whose e orts are complementary, are rewarded accord-ing to a sharing rule chosen by the principal. Depending on the sharing.

I study the role of intrinsic motivation on optimal incentive contracts. Agents engage in efforts to generate projects with both financial return and intrinsic value to the agent. In the cost-reimbursement contracts, the contractor is reimbursed by the government for the allocable, allowable and reasonable costs of performance (Rumbaugh, ). It is possible to combine the two types of incentive contracts that both incentive and award fees many be earned on the same contract.


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Unique implementation of incentive contracts with many agents by Ching-to Ma Download PDF EPUB FB2

Downloadable (with restrictions). In this paper we consider the problem of implementation when a principal hires many agents and is not able to monitor their actions. We distinguish two cases: (i) when actions are mutually observable among agents, (ii) when actions are not observable at all.

In (i), there is a mechanism in which the first-best arises as a unique perfect equilibrium. Ching-to Ma, "Unique Implementation of Incentive Contracts with Many Agents (Now published in Review of Economic Studies, LV (), pp)," STICERD - Theoretical Economics Paper SeriesSuntory and Toyota International Centres for Economics and Related Disciplines, LSE.

Handle: RePEc:cep:stitep The paper studies a contracting problem in which a principal enters in two-sided moral hazards withNindependent are no technological or informational linkages among theNagency e this independence, optimal incentive schemes essentially eliminate the principal's incentive problem when team size is large by: Ma, C.-T.: Unique Implementation of Incentive Contracts with Many Agents.

Review of Economic Stud – () MathSciNet CrossRef zbMATH Google Scholar Author: Li Lin, Jinpeng Huai, Yanmin Zhu, Chunming Hu, Xianxian Li. Incentive contracts are entered into when there is some uncertainty in the cost of work, particularly when a product is being built to unique specifications.

These contracts specify the amount of profit or fee payable under the contract for a contractor's performance. Incentive contracts establish a target price, target profit and a maximum cost. Ching-To Ma (), ‘Unique Implementation of Incentive Contracts with Many Agents’, Review of Economic Studies, LV (4), October, –71 Volume II Contents: Introduction An introduction by the editor appears in Volume I PART I COLLECTIVE DECISION PROBLEMS: INCOMPLETE CONTRACTING AND THE NON-VERIFIABILITY PARADIGM.

by agents, it can base payments to the agents only on their outputs. An incentive scheme for agent k is thus an (n1n2) dimensional vector 1k={Jj}3E[L 1]flf2, where I] is the payment given to agent k if output pair (q,X qj) results.

Given a pair (i, I2) of incentive schemes and actions (a1, a2) chosen by agents, the principal incurs an expected. To do so, two incentive contracts are discussed—one including a cooperation clause and another without such a clause.

The comparison shows that no contract dominates the other one. The principal’s decision rather depends on the anticipated behaviour of the agents as well as on the properties of the production functions by: 1. Optimal Incentive Schemes with Many Agents Article (PDF Available) in Review of Economic Studies 51(3) February with Reads How we measure 'reads'Author: Dilip Mookherjee.

Fixed price incentive contracts are often used when there is some uncertainty in the cost of the work, particularity when a product is being built to unique specifications, and does not use off-the-shelf components.

This is common in contracts involving test programs or new technology or processes. act in ways that may impair performance and efficiency (Baker ). As incentive contracts appeal to self-interest, parties to the contract might become more selfish. This has important implications for the design, implementation and monitoring of incentive contracts.

Actor-network theory perspective. Incentive Programs for Service Agents: A Pre-Implementation Checklist. Jeremy Watkin - Septem 1. We created an incentive program where we tracked successful upsells and the top performers each month earned a reward.

It didn’t take long to realize that the same people topped the list every month and they also happened to Author: Jeremy Watkin. The lower X is, the less the incentive is to cut costs on the contracting activity at the expense of profits in the rest of the firm.

On the other hand, when X is higher, the agent must bear a greater share of cost risk, and K must be made sufficiently larger to induce the firm to accept the contract.

EFFICIENT INCENTIVE CONTRACTS. the latter types of incentive, a range of different types of incentive may be used, e.g. monetary incentives such as fixed-price contracts, cost-plus-incentive fees, cost-plus-award-fees, share-in-savings incentives, and non-monetary incentives such as automatic extension of contract term, more frequent payments, letters of appreciation etc.

Incentive contracts involve paying agents a "bonus" on the basis of a good measured outcome and punishing them otherwise. To work the difference between their payoff in the good and bad outcomes must satisfy an incentive compatibility constraint (i.e., be self-enforcing).

incentive contract: Fixed price or cost reimbursement contract in which a target cost, price, or fee (profit) is used as a point of departure for various monetary-incentives (subject to a maximum amount).

After completion of the contract, the incentive payment is computed on the basis of the contractor's actual cost plus a sliding scale of. fixed-price contracts and cost-reimbursement contracts.

The specific contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed (Ref FAR (b)).

Incentive contracts are covered in the Federal Acquisition Regulation (FAR) at Subpart - Incentive Contracts. The FAR is not binding on grantees, but the FAR discussion of what is required on Federal contracts may be helpful. Incentive contracts take many forms and we do not believe there is an absolute rule for all types of contracts.

For example in the ’90s, many health plans introduced physicians-level risk contracts via MSOs, IPAs and PHOs throughout the U.S. However, by the late ’90s, these arrangements fell apart due to several reasons not the least of which was misaligned incentives between the health plan and the MSO/IPA/PHOs.

Incentive Based Contracts are Back. Incentive Contracting And Pricing Issues In DoD Acquisitions 1 Jerome C. Burke (Jerry) BAE Systems Vice President, Contracts Electronic Systems NCMA Boston Chapter March Workshop Bentley College 13 March J.C.

Burke NCMA March File Size: 2MB. Contracts, Fairness, and Incentives because concerns for fairness strongly affect the incentive properties of the contracts.

However, we also conducted a second experiment in which the principal was restricted to Thus, too many fair agents can be detrimental to the efficiency of a bonus contract.Subpart —Incentive Contracts General. (a) Incentive contracts as described in this subpart are appropriate when a firm-fixed-price contract is not appropriate and the required supplies or services can be acquired at lower costs and, in certain instances, with improved delivery or technical performance, by relating the amount of profit or fee payable under the .of Life (15 + Additional Incentive for Preferred Agents) and dollars per 1, of Annuity NPA (10 + Additional Incentive for Preferred Agents).

Mary of life NPA issued in a month thereafter, w in one policy. Mary earns another $ (not $) from such policy, because REWARD$ dollars are capped at $ per Size: KB.