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Analysis of the Relationship Between Optimal Incentive Plan and Supervision Cost

In: Proceedings of the 19th International Symposium on Advancement of Construction Management and Real Estate

Author

Listed:
  • Peng Mao

    (Nanjing Forestry University)

  • Bingqing Jiang

    (Nanjing Forestry University)

  • Xia Yao

    (Nanjing Forestry University)

  • Sishuo Li

    (Nanjing Forestry University)

Abstract

There are principal-agent relationships between owners and engineers in the practices of construction supervision. Because of the inconsistency of their goals and the asymmetry of information, fixed supervision cost can not effectively produce incentives for the engineers’ effort. Firstly we assumed that the information is symmetrical and analyzed the fixed supervision cost mechanism based on the principal-agent theory. Furthermore, the incentive mechanism under the condition of information asymmetry was analyzed, and the finding was that an optimal incentive plan should adopt floating supervision cost mechanism.

Suggested Citation

  • Peng Mao & Bingqing Jiang & Xia Yao & Sishuo Li, 2015. "Analysis of the Relationship Between Optimal Incentive Plan and Supervision Cost," Springer Books, in: Liyin Shen & Kunhui Ye & Chao Mao (ed.), Proceedings of the 19th International Symposium on Advancement of Construction Management and Real Estate, edition 127, chapter 0, pages 1207-1217, Springer.
    • Handle: RePEc:spr:sprchp:978-3-662-46994-1_101
    DOI: 10.1007/978-3-662-46994-1_101
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