Dynamic Procurement under Uncertainty: Optimal Design and Implications for Incomplete Contracts
Malin Arve
(1)
,
David Martimort
(2, 3)
David Martimort
- Fonction : Auteur
- PersonId : 1043577
- ORCID : 0000-0002-4185-8703
- IdRef : 070009635
Résumé
We characterize the optimal dynamic contract for a long-term basic service when an uncertain add-on is required later on. Introducing firm risk aversion has two impacts. Profits for the basic service can be backloaded to induce cheaper information revelation for this service: an Income Effect which reduces output distortions. The firm must also bear some risk to induce information revelation for the add-on. This Risk Effect reduces the level of the add-on but hardens information revelation for the basic service. The interaction between these effects has important implications for the dynamics of distortions, contract renegotiation, and the value of incomplete contracts.
Domaines
Economies et financesFormat du dépôt | Notice |
---|---|
Type de dépôt | Article dans une revue |
Titre |
en
Dynamic Procurement under Uncertainty: Optimal Design and Implications for Incomplete Contracts
|
Résumé |
en
We characterize the optimal dynamic contract for a long-term basic service when an uncertain add-on is required later on. Introducing firm risk aversion has two impacts. Profits for the basic service can be backloaded to induce cheaper information revelation for this service: an Income Effect which reduces output distortions. The firm must also bear some risk to induce information revelation for the add-on. This Risk Effect reduces the level of the add-on but hardens information revelation for the basic service. The interaction between these effects has important implications for the dynamics of distortions, contract renegotiation, and the value of incomplete contracts.
|
Auteur(s) |
Malin Arve
1
, David Martimort
2, 3
1
Norwegian School of Economics and Business Administration
( 50806 )
- Norvège
2
PSE -
Paris-Jourdan Sciences Economiques
( 139754 )
- 48 boulevard Jourdan 75014 Paris
- France
3
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
|
Langue du document |
Anglais
|
Nom de la revue |
|
Vulgarisation |
Non
|
Comité de lecture |
Oui
|
Audience |
Internationale
|
Date de publication |
2016-11
|
Volume |
106
|
Numéro |
11
|
Page/Identifiant |
3238-3274
|
Domaine(s) |
|
Projet(s) ANR |
|
Mots-clés |
en
Dynamic Contract
|
DOI | 10.1257/aer.20150275 |
Loading...