Selection Incentives in a Performance-Based Contracting System

Risk selection and matching in performance-based contracting.

This paper examines selection and matching incentives of performance-based contracting (PBC) in a model of patient heterogeneity, provider horizontal differentiation and asymmetric information. Treatment effectiveness is affected by the match between a patient's illness severity and a provider's treatment intensity. Before PBC, a provider's revenue is unrelated to treatment effectiveness; there...

Risk, Incentives, and Contracting Relationships

The aim of this paper is to understand the impact of optimal provision of both risk and incentives on the choice of contracting partners. I study a risky setting where heterogeneously risk-averse employers and employees must match to be productive. They face a standard onesided moral hazard problem: mean output increases in the noncontractible input of the employee. Better insurance comes at th...

Contracting for E-mall Services: “performance-based” Transfers and Countervailing Incentives

We discuss an agency model for an e-market place. When a marketplace goes from brick-and-mortar to virtual, incentive issues of e-mall providers become significant because contracting for an e-mall service can be “outcome-based.” We discuss the internet firm’s incentives associated with the cost of operating an e-mall and different types of optimal contracting policy.  Department of OMIS, Leav...

Condition-based maintenance under performance-based contracting

Performance-based contracting in the construction sector

Construction procurement is complex and there is a very wide range of options available to procurers. Inappropriate choices about how to procure may limit practical opportunities for innovation. In particular, traditional approaches to construction procurement set up many obstacles for technology suppliers to provide innovative solutions. This is because they are often employed as sub-contracto...