Strategic Contracting for Software Upgrade Outsourcing in Industry 4.0

The advent of Industry 4.0 has compelled businesses to adopt digital approaches that combine software toenhance production efficiency. In this rapidly evolving market, software development is an ongoing process thatmust be tailored to meet the dynamic needs of enterprises. However, internal research and development can beprohibitively expensive, driving many enterprises to outsource software development and upgrades to externalservice providers. This paper presents a software upgrade outsourcing model for enterprises and service providersthat accounts for the impact of market fluctuations on software adaptability. To mitigate the risk of adverseselection due to asymmetric information about the service provider’s cost and asymmetric information aboutthe enterprise’s revenues, we propose pay-per-time and revenue-sharing contracts in two distinct informationasymmetry scenarios. These two contracts specify the time and transfer payments for software upgrades. Througha comparative analysis of the optimal solutions under the two contracts and centralized decision-making withfull-information, we examine the characteristics of the solutions under two information asymmetry scenarios andanalyze the incentive effects of the two contracts on the various stakeholders. Overall, our study offers valuableinsights for firms seeking to optimize their outsourcing strategies and maximize their returns on investment insoftware upgrades.

Study on Principal-agent Mechanism in Chinese Private Enterprises

Based on the principal-agent theory, this paper analyzes the current situation and the developing trends of Chinese private enterprises. It points out the obstacles confronted by Chinese private enterprise in setting up the principal-agent mechanism and proposes the corresponding solutions to these problems.

A PENALTY FUNCTION METHOD FOR THE PRINCIPAL-AGENT PROBLEM WITH AN INFINITE NUMBER OF INCENTIVE-COMPATIBILITY CONSTRAINTS UNDER MORAL HAZARD

In this paper,we propose an iterative algorithm to find the optimal incentive mechanism for the principal-agent problem under moral hazard where the number of agent action profiles is infinite,and where there are an infinite number of results that can be observed by the principal.This principal-agent problem has an infinite number of incentive-compatibility constraints,and we transform it into an optimization problem with an infinite number of constraints called a semi-infinite programming problem.We then propose an exterior penalty function method to find the optimal solution to this semi-infinite programming and illustrate the convergence of this algorithm.By analyzing the optimal solution obtained by the proposed penalty function method,we can obtain the optimal incentive mechanism for the principal-agent problem with an infinite number of incentive-compatibility constraints under moral hazard.

Bi-Level Programming for the Optimal Nonlinear Distance-Based Transit Fare Structure Incorporating Principal-Agent Game

The urban transit fare structure and level can largely affect passengers’travel behavior and route choices.The commonly used transit fare policies in the present transit network would lead to the unbalanced transit assignment and improper transit resources distribution.In order to distribute transit passenger flow evenly and efficiently,this paper introduces a new distance-based fare pattern with Euclidean distance.A bi-level programming model is developed for determining the optimal distance-based fare pattern,with the path-based stochastic transit assignment(STA)problem with elastic demand being proposed at the lower level.The upper-level intends to address a principal-agent game between transport authorities and transit enterprises pursing maximization of social welfare and financial interest,respectively.A genetic algorithm(GA)is implemented to solve the bi-level model,which is verified by a numerical example to illustrate that the proposed nonlinear distance-based fare pattern presents a better financial performance and distribution effect than other fare structures.

SCM Implementation Decisions of Principal-Agent under Asymmetric Information

The optimization investment policy decision of SCM-Supply Chain Management-implementation has been analysed under symmetric and asymmetric information conditions. For both conditions, SCM implementation options’ decision optimizing models have been developed. In these models, both clients and vendors try to pursue their own benefits. Based upon the principal-agent theory, the models show to what extent a principal (a client) needs to pay more to an agent (a vendor) in a context of asymmetric information. For the client, it is important to understand the extra costs to be able to adopt effective strategies to stimulate a vendor to perform an optimal implementation of a SCM system. The results of a simulation experiment regarding SCM implementation options illustrate and verify the theoretical findings and confirm the general notion that the less informed party is obliged to pay information rent to the better-informed party.

Design of Principal-agent Incentive Mechanism between Government and NPO

Based on principal-agent theory,this paper establishes an incentive contract mechanism between government and NPO under asymmetric information,and analyzes the impact of absolute risk aversion and output level on the expected utility of government,NPO and society.Research shows that risk aversion is negatively correlated with the expected utility of government,NPO and society.The output coefficient is positively correlated with the expected utility of government,NPO and society.Reducing absolute risk aversion,increasing output coefficient and increasing government incentives can effectively motivate NPO to actively participate in social rescue activities.

SHORT COMMUNICATION Principal-agent Relationships: A Note on Biomass Depletion

Public authorities frequently mandate public or private agencies to manage their renewable natural resources.Contrary to the agency,which is an expert in renewable natural resource management,public authorities usually ignore the sustainable level of harvest.In this note,we first model the contractual relationship between a principal,who owns the renewable natural resource,and an agent,who holds private information on its sustainable level of harvest.We then look for the Pareto-optimal allocations.In the situation of an imperfect information setting,we find that the Pareto-optimal contracting depends on the probability that the harvesting level stands outside the sustainability interval.The information rent held by the agent turns out to be unavoidable,such that stepping outside the sustainability interval implies the possibility of depletion of the renewable natural resource.This,in turn,compromises the maintenance of the ecological balance in natural ecosystems.

制造型企业供应链的冲突机理及多agent系统的研究

文章从理论上研究了制造型企业供应链的信息不对称问题 ,分析了供应链中的冲突机理和principal -agent问题的特点。而后从供应链信息协调的角度研究了多agent系统在供应链协调中的应用 。

A Study on the Multi-Task Incentive Mechanism for the Service Provider

Both conflict and asymmetric information exist betweenthe telecom operators and the service provider,and result in illegal behaviors of the service provider.The relationship between the telecom operators andthe service provider is classical multi-task principalagentrelationship. The multi-task incentive for theservice provider is considered in the design of theprincipal-agent incentive contract, and it is necessaryto add the multi-task incentive to the serviceproviders through the analysis of the risk costs andthe agency costs of this problem.

Prevention of the Member＇s Moral Hazard in a Dynamic Alliance

Moral hazard is an important factor threatening stability of dynamic alliance. Firstly, the paper describes the problem of moral hazard in dynamic alliance and introduces the Tirole Model of moral hazard prevention. Then, by introducing a third-party system into dynamic alliance, a model of incomplete information dynamic game theory is formulated in the principal-agent framework. The model shows the dynamic consistency between a member＇s income and the dynamic alliance＇s profit, and that moral hazard can be prevented by an allocation policy With both characteristics of incentive measures and supervision, which is designed by a third-party system. Finally, the composition of the third-party system is discussed.

Effective Incentive and Discipline Mechanisms for Top manage-ment in SOEs

Key to energize State-Owned-Enterprises (hereinafter SOEs) is to set up effective incentive and discipline mechanisms. First of all, the paper analyses the problems existing in the current incentive and discipline mechanism system in SOEs, including low transparency income and considerable covert income, insider control,corporate governance nominalization and so on; next,the paper explores the causes behind these problems,such as incomplete corporate governance and imperfect market mechanism; finally, the paper proposes a series of solutions from the aspects of incentive mechanism and discipline mechanism.

Heterogeneous responsibilities of three grassland resource governance modes in Inner Mongolia, China

Grassland resource governance is an important part of ecological civilization construction,and it directly af‐fects grassland governance performance.This study deploys principal-agent theory and uses social network analysis to compare grassland resource governance modes in China in terms of institutional settings and insti‐tutional network characteristics.This study found three types of grassland resource governance modes:self-designed,docked,and integrated.The self-designed mode forms a network structure with dual centers and multiple members,and has the second-best structural mode of the three types.The docked mode forms a net‐work structure with a single center in which the institution is the absolute core and is relatively divergent.It has the weakest structural advantage of the three types.The integrated mode forms a network structure with a single institution at the core and other institutions distributed evenly throughout the structure.This mode has the strongest structural advantage among the three types.This study offers the practical application of improv‐ing the practice of grassland governance in China and is theoretically significant because it can contribute to improving grassland governance modes and enriching the public goods resources governance.

Value of subjective performance evaluation： A theoretical perspective

To break through the academic research tradition of isolating subjective performance evaluation （SPE） with objective evaluation, and enhance the application and explanation power of analytical research findings, this paper adopts a one-period principal-agent model, and solves programming problems by internalizing validity conditions for SPE as constraints according to revelation principle. We find that both SPE and its objectivization can achieve Pareto improvement for both the principal and the agent. Our findings have a general application beyond bonus contracts; it not only explains the pervasive existence of SPE, but also helps to interpret phenomena of the objectification of SPE.

Traditional Chinese Medicine’s Challenge to Clinical Science and Health Policy

Traditional Chinese medicine(TCM)has been improving human health for millennia.And for that,it has gradually gained the attention of the global scientific community.TCM clinical research progresses,but slowly.I see it as being held back by perverse incentive structures in science and regulatory politics.

The analysis of government procurement in the frame of principal agent theory

In government procurement activities, asymmetric information, incomplete contracts and opportunism, led to the dysfunction of principal-agent. Through the reference of the principal-agent theory, this paper uses the model of the principal-agent to analyze government procurement activity, and proposes some countermeasures to improve principal-agent in government procurement.

An optimal incentive contract to venture capitalist

This paper aims to study the principal-agent relationship between investors and venture capitalists （VCs）, makes research on the moral hazard issues under this relationship, and how to design an effective incentive mechanism to avoid it. By constructing a new incentive model, this paper provides the reference for investors to establish a reasonable payment contract. The designed incentive contract is a kind of dominant consecutive payment mode, which plays a strong incentive role to the VCs, in addition, it also requires the VCs to invest certain capital to the project, which can effectively prevent the slapdash action of VCs, and reduce the agent cost of investors.

Congruity of Multiple Performance Measures

In multi-action situation, there are losses of efficiency due to noise effect and incongruity effect. To isolate noise effect, we prove that the loss of efficiency is zero if and only if the objective of the principal is a linear representation of the performance measures when the performance measures are noiseless. Using this result, several definitions of incongruity are given. Our definitions extend the single performance definition given in Feltham and Xie （1994） to multiple performance measures situation, and reconcile the conflict between the definition given in Datar et al. （2001） and that in Feltham and Xie （1994）. A numeric example is analyzed to show the way that the variances of measures and correlation coefficient between measures affect the utility of the principal.

Economics Thought on the Accountant-appointed System

As one of the effective measures to reduce distorted accounting information, the accountant-appointed system has played its due role in preventing the state-owned assets from running off and strengthening the financial affairs of state-owned enterprises. But as a kind of new try, the accountant-appointed system still has a lot of defects in the course of its implementation. This paper explains the reason that inherent defects produce with the principal-agent theory in economics. Then it puts forward some countermeasures and suggestions to perfect the accountant-appointed system constantly.

Linear-contract Mechanisms Based on the Risk Preference of an Agent in a Supply Chain

With respect to different risk preference of an agent in a supply chain, linear-contract models are designed according to the principal-agent theory. The study shows that the risk preference of an agent directly correlates with the incentive compensation coefficient of principal, order quantity of principal and production capability level of the agent. The principal should offer an appropriate incentive contract according to the risk preference of the agent, or choose an agent holding a different risk preference to establish the supply chain.

Understanding the deterrence effect of punishment for marine information security policies non-compliance

In the organizational setting of marine engineering,a significant number of information security incidents have been arised from the employees’failure to comply with the information security policies(ISPs).This may be treated as a principal-agent problem with moral hazard between the employer and the employee for the practical compliance effort of an employee is not observable without high cost-.On the other hand,according to the deterrence theory,the employer and the employee are inherently self-interested beings.It is worth examining to what extent the employee is self-interested in the marine ISPs compliance context.Moreover,it is important to clarify the proper degree of severity of punishment in terms of the deterrent effect.In this study,a marine ISPs compliance game model has been proposed to evaluate the deterrence effect of punishment on the non-compliance behavior of employee individuals.It is found that in a non-punishment contract,the employee will decline to comply with the marine ISPs;but in a punishment contract,appropriate punishment will lead her to select the marine ISPs compliance effort level expected by the employer,and cause no potential backfire effect.