Contracting inside an organization: An experimental study |
| |
| Authors: | Paul J Healy John O Ledyard Charles Noussair Harley Thronson Peter Ulrich Giulio Varsi |
| |
| Institution: | (1) Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA 15213, USA;(2) Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, CA 91125, USA;(3) Department of Economics, Emory University, Atlanta, GA 30322-2240, USA;(4) Office of Space Science, NASA Headquarters, Washington, DC, USA |
| |
| Abstract: | In this paper we propose and test a contracting mechanism, Multi-Contract Cost Sharing (MCCS), for use in the management of
a sequence of projects. The mechanism is intended for situations where (1) the contractor knows more about the true costs
of various projects than does the contracting agency (adverse selection), and (2) unobservable effort on the part of the contractor
may lead to cost reductions (moral hazard). The proposed process is evaluated in an experimental environment that includes
the essential economic features of the NASA process for the acquisition of Space Science Strategy missions. The environment
is complex and the optimal mechanism is unknown. The design of the MCCS mechanism is based on the optimal contract for a simpler
related environment. We compare the performance of the proposed process to theoretical benchmarks and to an implementation
of the current NASA ‘cost cap’ procurement process. The data indicate that the proposed MCCS process generates significantly
higher value per dollar spent than using cost caps, because it allocates resources more efficiently among projects and provides
greater incentives to engage in cost-reducing innovations.
Electronic Supplementary Material Supplementary material is available in the online version of this article at .
JEL Classification C72, C92, D82, L32 |
| |
| Keywords: | Mechanism design Cost sharing Moral hazard NASA |
| 本文献已被 SpringerLink 等数据库收录！ |
|
