Application of Game Theory to the Construction Corporation Management
JIAN Ying-hui,OUYANG Hong-xiang
DOI:10.11835/j.issn.1674-4764.2004.05.023
Received ,Revised April 20, 2004, Accepted , Available online July 01, 2015
Volume ,2004,Pages 105-108
- Abstract
Based on the introduction of particularity of the construction project and asymmetric information in its implementation, it shows that the project manager may have opportunism behavior, which affects the construction corporation and project manager. A principal-agent theory is applied to set up two models under different risk attitude and which proved that only if the agent were risk-neutral, the principal would get the maximum profit by leasing the project. The opportunism behavior does appear in the optimal incentive mechanism when the agent is risk-avoiding and it is harmful to the principal's benefit. The fundamental way to eliminate opportunism is enhancing the incentive intensity and enforcing outside monitoring and binding mechanism.