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Author : Jen-Yi Chen
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (14 download)
Download or read book Two essays on procurement contract design written by Jen-Yi Chen and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Eva I. Hoppe-Fischer
Publisher : Springer
ISBN 13 : 3658241330
Total Pages : 211 pages
Book Rating : 4.6/5 (582 download)
Download or read book Essays on Contract Design and Incentive Provision written by Eva I. Hoppe-Fischer and published by Springer. This book was released on 2019-02-19 with total page 211 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contract theory, which emphasizes the importance of unverifiable actions and private information, has been a highly active field of research in microeconomics in the last decades. This thesis is divided into two parts. Part I consists of three chapters that study contract-theoretic models which are motivated by the classic procurement problem of a principal who wants an agent to deliver a certain good or service. In such models it is typically assumed that decision makers are interested in their own monetary payoffs only. Moreover, they have unlimited cognitive abilities and behave in a perfectly rational way. Yet, in practice people often do not behave this way. While empirical research is very difficult in contract theory, laboratory experiments have recently turned out to be an important source of data. In Part II, three experimental studies are presented that investigate contract-theoretic problems brought up in Part I.
Author : Basak Kalkanci
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (665 download)
Download or read book Essays on Procurement Contracting Under Private Demand Information written by Basak Kalkanci and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The goal of this dissertation is to bridge the gap between theory and practice in contract design under asymmetric demand information. There are certain assumptions in the literature that makes the practicality of the well-known results questionable: (1) The existing literature limits itself to contractual agreements between two parties in isolation of these parties' contracts with other members of the supply chain. (2) Contracts identified by theory as optimal are often arbitrarily complex while we observe that much simpler contracts prevail in practice. (3) The theoretical models in the literature do not always incorporate the behavioral influences. Therefore, relaxing these assumptions to better reflect the reality and examining how they change the existing results in the literature are especially relevant today. To serve this purpose, this dissertation combines theoretical and experimental analysis. The first part of the dissertation provides a comprehensive theoretical analysis of decentralized assembly systems under asymmetric demand information. We reveal new insights on the value of contract type (price-only versus complex), demand information (complete versus asymmetric), and contracting sequence (simultaneous versus sequential) to different players. We find that complex contracts increase the suppliers' aggregate profit, however, individual suppliers do not necessarily benefit from a complex contracting equilibrium. Moreover, intuition suggests that eliminating information asymmetry would be beneficial for the suppliers; but this holds only to a certain extent. Obtaining information may bring only marginal value to the suppliers, hence, may not be realistically justified, and under sequential contracting, a downstream supplier may prefer information asymmetry to complete information, especially when demand variability is high. In the second part of the dissertation, we study a two-tier supply chain with a single supplier and a single buyer to characterize the impact of contract complexity and asymmetric information on performance and to compare theoretical predictions to actual behavior in human subject experiments. The buyer, who faces a newsvendor setting, has better information on end-consumer demand as compared to the supplier. The supplier offers either a quantity discount contract (with two or three price blocks) or a price-only contract; contracts that are commonplace in practice, yet different in complexity. When a human supplier interacts with a computerized buyer, results show that, contrary to theoretical predictions, quantity discounts do not necessarily increase the supplier's profits. We also observe a more equitable distribution of profits between the supplier and the buyer than what theory predicts. These observations can be explained with the experience-weighted attraction learning model and three decision biases; probabilistic choice/bounded rationality, reinforcement bias, and the memory effect. Our results demonstrate that simpler contracts, such as a price-only contract or a quantity discount contract with a low number of price blocks, are sufficient for a supplier designing contracts under asymmetric demand information. Human-to-human interactions strengthen these results.
Author : Eva I. Hoppe
Publisher :
ISBN 13 : 9783937404974
Total Pages : 211 pages
Book Rating : 4.4/5 (49 download)
Download or read book Essays on Contract Design and Incentive Provision written by Eva I. Hoppe and published by . This book was released on 2011 with total page 211 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Nicolas Fugger
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (962 download)
Download or read book Essays on Procurement Design written by Nicolas Fugger and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Paula Cordero-Salas
Publisher :
ISBN 13 :
Total Pages : 185 pages
Book Rating : 4.:/5 (747 download)
Download or read book Essays in Contract Design Under Incomplete Enforcement written by Paula Cordero-Salas and published by . This book was released on 2011 with total page 185 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: This dissertation applies relational contract theory to study the optimal incentive provision in situations when formal enforcement is too costly. Essay one considers a theoretical redistribution of bargaining power among business partners who trade repeatedly and that traditionally hold asymmetric power to negotiate contract terms. I included a bargaining process in a relational contracts model to analyze the economic consequences of shifting bargaining power under different enforcement regimes. The model predicts that as the agent's bargaining power increases, her incentive payments decrease even though her total compensation increases. Thus, efficiency wage contracts are more likely to be observed than contingent performance contracts in markets where agents have bargaining power. In contexts where enforcement is weak, a transfer of bargaining power can erode market efficiency in a dynamic relational contracting environment. If principals lose power coupled with the absence of enforcement, they may find the short-term gains of reneging on contractual promises more attractive than long-term benefits of faithfully executing a contract where they hold less power. As a consequence trade is more likely to break down. In this case, the agent is better off exercising less bargaining power than she has. Nonetheless, the model also predicts that such a collapse in good-faith execution of contracts in the light of such a power shift may not occur if some minimum payment for contract participation is enforced. Essay two provides experimental evidence on the theoretical predictions from essay one. I implement an experimental design that adjusts the bargaining power of sellers (agents) and the enforceability of the contract. I find that the vast majority of contracts take the form of efficiency wage contracts instead of contingent performance contracts when enforcement is partially incomplete and sellers have more bargaining power than buyers. The total contracted and actual compensation increase with the bargaining power of the sellers. However, sellers' profits are found to increase only if a part of the total payment is third-party enforceable. In this case, observed surplus and efficiency are lower than predictions. When no part of a contract is third-party enforceable, more cooperative relationships emerge, exhibiting higher quality provision resulting in higher surplus and efficiency while rent sharing is lower. The result is explained by the stronger buyer's deviation, confirming predictions from essay one. Essay three considers the application of relational contracts as a mechanism for the reduction of carbon emissions from deforestation and forest degradation (REDD). I compared the structure of the optimal relational contract in the presence of purely self-interested participants to the optimal structure when participants are motivated by other preferences including altruism, spite, inequality aversion or warm-glow concerns. I find that the optimal contract structure only differs from the benchmark case of self-interested agents when seller preferences are different than only profit-maximizing preferences or if either party is inequality averse. Moreover, I also show that the presence of other regarding preferences increases or decreases the likelihood of cooperation in the long-term relationship relative to the case of self-interested participants.
Author : Walter Alberto Cont
Publisher :
ISBN 13 :
Total Pages : 272 pages
Book Rating : 4.:/5 (55 download)
Download or read book Essays on Contract Design written by Walter Alberto Cont and published by . This book was released on 2001 with total page 272 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Corrales Compagnucci, Marcelo
Publisher : Edward Elgar Publishing
ISBN 13 : 1839102284
Total Pages : 480 pages
Book Rating : 4.8/5 (391 download)
Download or read book Research Handbook on Contract Design written by Corrales Compagnucci, Marcelo and published by Edward Elgar Publishing. This book was released on 2022-05-03 with total page 480 pages. Available in PDF, EPUB and Kindle. Book excerpt: Weaving together theoretical, historical, and legal approaches, this book offers a fresh perspective on the modern revival of the concept of allegiance, identifying and contextualising its evolving association with theories of citizenship.
Download or read book Essays on Contracts and Organizational Design written by and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Essays on contracts and organizational design.
Author : Pamela Pen-Erh Pei
Publisher :
ISBN 13 :
Total Pages : 116 pages
Book Rating : 4.:/5 (319 download)
Download or read book Towards a Unified Theory of Procurement Contract Design written by Pamela Pen-Erh Pei and published by . This book was released on 2008 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present in this work a unified approach and provide the optimal solution to the pricing problem of option contracts for a supplier of an industrial good in the presence of spot trading. Specifically, our approach fully and jointly endogenizes the determination of three major characteristics in contract design, namely (i) Sales contracts versus options contracts; (ii) Flat fee versus volume- dependent contracts; and (iii) Volume discounts versus volume premia; combining them together with spot market trading decisions and also the option of delaying production for the seller. We build a model where a supplier of an industrial good transacts with a manufacturer who uses the supplier's product to produce an end good with an uncertain demand. We derive the general non-linear pricing solution for the contracts under information asymmetry of the buyer's production flexibility. We show that confirming industry observations, volume-dependent optimal sales contracts always demonstrate volume discounts (i.e., involve concave pricing). On the other hand the options contracts are more complex agreements, and optimal contracts for them can involve both volume discounts and volume premia. Further, we find that in the optimal contracts, there are three major pricing regimes. First, if the seller has a higher discount rate than the buyer and the production costs are lower than a critical threshold value, the optimal contract is a flat fee sales contract. Second, when the seller is less patient than the buyer but production costs are higher than the critical threshold, the optimal contract is a sales contract with volume discounts. Third, if the buyer has a higher discount rate than the seller, then the optimal contract is a volume-dependent options contract and can involve both volume discounts and volume premia. We further provide links between industry and spot market characteristics, contract characteristics and efficiency. Last, we look into an extension of our basic model, where we give an analysis for the case when the seller is given a last minute production option.
Author : Aleksei Suzdaltsev
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (115 download)
Download or read book Essays in Robust Mechanism and Contract Design written by Aleksei Suzdaltsev and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, we propose solutions to three problems in the area of robust mechanism design. The first two problems concern revenue maximization by a seller facing several potential buyers whose knowledge of the probability distribution of buyers' valuations is scarce. The third problem concerns contracting under unknown production technology. More specifically: In Chapter 2 (first substantive chapter), we consider the following model. An indivisible object may be sold to one of n agents who know their valuations of the object. The seller would like to use a revenue-maximizing mechanism but her knowledge of the values' distribution is limited: she knows only the means (which may be different) an upper bound for valuations. Valuations may be correlated. Using a constructive approach based on duality, we prove that a mechanism that maximizes the worst-case expected revenue among all deterministic dominant-strategy incentive compatible, ex post individually rational mechanisms takes the following form: (1) the bidders submit bids; (2) for each bidder, a bidder-specific linear function of the bid is calculated (we call it a ``linear score''); (3) the object is awarded to the agent with the highest score, provided it's nonnegative; (4) the winning bidder pays the minimal amount he would need to bid to still win in the auction. The set of optimal mechanisms includes other mechanisms but all those have to be close to the optimal linear score auction in a certain sense. When means are high, all optimal mechanisms share the linearity property. Second-price auction without a reserve is an optimal mechanism when the number of symmetric bidders is sufficiently high. In Chapter 3, we consider a related problem in which the valuations are constrained to be independent draws from a partially known distribution. The seller knows one or two moments of the distribution. We ask what would be a reserve-price in a second-price auction that maximizes worst-case expected revenue. Using a technique different from Chapter 2, we prove that it is always optimal to set the reserve price to seller's own valuation. However, the maxmin reserve price may not be unique. If the number of bidders is sufficiently high, all prices below the seller's valuation, including zero, are also optimal. In the final chapter, we seek a robust solution of a hidden-action, rather than a hidden-information problem. A principal is uncertain about a technology mapping an agent's effort to the distribution of output. The agent is risk neutral and there is a participation constraint but no limited liability constraint. Transfers can be costly. An example of this setting is the case where the principal is a society trying to properly incentivize a firm to carry out innovation. We first show that when the principal employs minimax-regret criterion in the face of the technological uncertainty, an optimal contract is affine. We then characterize the full set of optimal contracts. A contract is optimal if and only if it lies within certain affine, increasing bounds that collapse to a point when output reaches its maximum value.
Author : Qiang Li
Publisher :
ISBN 13 : 9781361033739
Total Pages : pages
Book Rating : 4.0/5 (337 download)
Download or read book Integrating Commodity Futures in Procurement Planning and Contract Design with Demand Forecast Update written by Qiang Li and published by . This book was released on 2017-01-26 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Integrating Commodity Futures in Procurement Planning and Contract Design With Demand Forecast Update" by Qiang, Li, 李強, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This study aims at investigating the benefits of integrating commodity futures contracts in devising commodity procurement policies as well as the design of supply contracts. To achieve this, a two-tier decentralised supply chain with uncoordinated risk transfer behaviours is studied. Specifically, the supply chain consists of a risk-neutral manufacturer (he) and a risk-averse retailer (she), where both players maximise their own objective functions by utilising the demand forecast update over the planning horizon. The mean-variance utility is employed to capture the retailer''s risk aversion behaviour. For the first objective, this study considers a commodity procurement problem for the risk-neutral manufacturer. It shows that partially procuring in the forward market is potentially beneficial because the logistics costs tend to be larger for tighter delivery schedule and vice versa. Existing literature has studied the value of forward procurement. This study further explores the value of the dynamic adjustment in the forward (futures) market in response to the demand information update. Specifically, when the joint distribution of demand and new information is a bivariate normal distribution, the optimal procurement policy is characterized analytically. The second objective is studied within the supply chain setting, where the manufacturer is assumed to be the Stackelberg leader. Recently, various financial hedging strategies have been developed to mitigate the price risks for firms which directly procure commodities for their operations. However, few, if any, studies have addressed the integration of financial hedging with supply contract design so that the risk exposure faced by the downstream player in the supply chain could be partially hedged. Although the downstream retailer does not procure any commodity directly, she may suffer from the commodity price volatility propagated from the upstream manufacturer. By formulating the problem as a dynamic program, a flexible contract with time-consistent closed-form financial hedging policy is derived. Numerical experiments are carried out to demonstrate the benefits gained by integrating the commodity futures contract with supply chain decision making. In the implementation, the short-term/long-term model developed by Schwartz and Smith is adopted to describe the stochastic behaviour of the price. Moreover, to preclude any risk-free arbitrage opportunity, the risk-neutral version of the model is employed. To take full advantage of the historical commodity price data, the smoother-based approach, rather than filter-based approach, is adopted to estimate the latent parameters of the stochastic price processes. For the manufacturer, it is shown that the value of the futures market is significant in the presence of logistics cost. Moreover, extra value could be obtained by adjusting the position in futures contracts in response to the newly observed information. For the decentralised supply chain, compared with the wholesale price contract, it is shown that the proposed flexible contract could improve the performance of the supply chain by leading to higher payoffs for both firms. Furthermore, the results show that flexible contract with financial hedging is effective on mitigating the commodity price risk exposure transferred from the manufacturer to the retailer when measured by standard deviation (SD), value-a
Author : Wei-Shiun Chang
Publisher :
ISBN 13 :
Total Pages : 103 pages
Book Rating : 4.:/5 (761 download)
Download or read book An Investigation Into the Design of Procurement Auctions written by Wei-Shiun Chang and published by . This book was released on 2011 with total page 103 pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: This dissertation examines a variety of mechanism designs adopted by industry to resolve two problematic issues in procurement auctions. Laboratory experiments are utilized to test theoretical predictions. The first essay investigates procurement auctions in a private value environment where procured goods are differentiated by unobservable characteristics. When unobservable characteristics are not taken into account in the selection process, the outcome of a procurement auction likely deviate from the buyer's optimal outcome. Three commonly used mechanisms are considered, namely standard second price auction, performance based contracting and pseudo quality screening. Bidders internalize unobservable characteristics into their bids and systematically transfer the equivalent value of those characteristics to buyers in the procurement auctions with performance based contracting. Subjects bid at their costs as predicted in the procurement auctions with pseudo quality screening and the price only mechanisms while they bid closely to their net costs in the auction with performance based contract. Experimental data has shown that the performance based contract mechanism generates higher buyer revenue than other two mechanisms do. The second essay is a test of a mechanism, average bid, used to resolve the winner's curse in a common value environment. Bidders' behavior in this mechanism is not significantly different from that in a conventional mechanism, low price. Consequently, price in the average bid mechanism is driven up and there is a reduction in the frequency of negative earnings and bankruptcy.
Author : Philippe Gillen
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (113 download)
Download or read book Essays on the Design of Procurement Mechanisms written by Philippe Gillen and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Dimitrios Kostamis
Publisher :
ISBN 13 :
Total Pages : 318 pages
Book Rating : 4.3/5 (91 download)
Download or read book Three Essays on Procurement Under Bargaining and Asymmetric Information written by Dimitrios Kostamis and published by . This book was released on 2007 with total page 318 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jonathan de Quidt
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (892 download)
Download or read book Essays on Contract Design in Behavioral and Development Economics written by Jonathan de Quidt and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Glen Segell
Publisher : Glen Segell Publishers
ISBN 13 : 1901414043
Total Pages : 393 pages
Book Rating : 4.9/5 (14 download)
Download or read book Essays on Civil-military Relations, Military-industrial Relations, Weapon Procurement, and International Relations written by Glen Segell and published by Glen Segell Publishers. This book was released on 1997 with total page 393 pages. Available in PDF, EPUB and Kindle. Book excerpt:
