Formulating Principal-Agent Service Contracts for a Revenue Generating Unit

This book examines the contractual options between an owner of a revenue generating unit and a provider of repair service for this unit. The developed framework is that of economists' principal-agent problem. The contractual options of a principal and an agent are modeled as a Markov process with an undetermined time horizon. For a risk neutral principal, the authors identify the conditions under which a principal contracts with a risk-neutral, risk-averse, or risk-seeking agent and derive the principal's optimal owner and the agent's service capacity response. In essence, the book provides an extensive formulating analysis of principal-agent contracts given any exogenous parameter values. That is, it derive mathematical formulas for the optimal contract owners and the agent's optimal service capacity. Ultimately a small number of formulas cover a large spectrum of principal-agent conditions.

• ISBN: 978-3-319-18671-9
• Editorial: Springer
• Encuadernacion: Rústica
• Fecha Publicación: 14/07/2015
• Nº Volúmenes: 1
• Idioma: Inglés