2007, Volume 9, Issue 4
Strategic Study of CAE >> 2007, Volume 9, Issue 4
A Study About IC and IR in Principal-gent RelationshipUnder the Engineer Supervision Institution
School of Nuclear Science and Engineering, Shanghai Jiao Tong University, Shanghai 200240, China
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Abstract
According to principal-agent theory, the Incentive compatibility constraint(IC)and the participation constraint (IR) in principal-gent relationship between employer and engineer are analyzed. The conclusions are drawn:The incentive compatibility constraint (IC) is more important than participation constraint (IR), If the mechanism doesn't satisfy the needs of IC, then it will be inefficient. If the employer wants to improve the engineer supervision institution, it must adopt incentive mechanisms which can make the engineer work hard, in the mean time the incentive mechanisms play efficient roles in solving the moral hazard. This paper will provide some implications for engineer supervision development in China.
Keywords
engineer supervision ; employer ; engineer ; principal-gent ; incentive compatibility constraint(IC) ; participation constraint(IR)
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