The optimal joint incentive contract designs and inventory decisions with an overconfident agent

被引：0
|
作者：
Kong X. [1 ]
Liu S. [1 ]
Shen X. [1 ]
Feng G. [2 ]
机构：
[1] International Institute of Finance, School of Management, University of Science and Technology of China, Hefei
[2] School of Management, Xi'an Jiaotong University, Xi'an
来源：
Xitong Gongcheng Lilun yu Shijian/System Engineering Theory and Practice | 2022年 / 42卷 / 01期
基金：
中国国家自然科学基金;
关键词：
Incentive contract; Inventory decision; Moral hazard; Overconfidence type;
D O I：
10.12011/SETP2021-0660
中图分类号：
学科分类号：
摘要：
This paper investigates the principal’s joint incentive contract designs and inventory decisions when the agent is subject to the behavioral bias such as overconfidence. Building on the principal-agent model and newsvendor model, we distinguish two common types of overconfidence: Overestimation and overprecision, and investigate their impacts on the joint optimal contract designs and optimal inventory decisions, respectively. We find that quota-bonus contracts that clear the inventory is optimal and different types of overconfidence can lead to significantly different or even opposite insights on the optimal decisions. Specifically, overprecision (resp. overestimation) results in a higher (resp. lower) bonus of the optimal contract and a lower (resp. higher or lower) inventory level compared with the counterpart with a rational agent. Furthermore, overestimation may yield higher profit than the first-best solution without moral hazard and mitigate the well-known overstocking phenomenon caused by moral hazard while overprecision may exaggerate the overstocking behavior. © 2022, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.
引用
收藏
页码：123 / 137
页数：14
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