A Research On Incompleteness And Improvement Of Traditional Contract Design Model

Economic relations are the basic relationship between people in real life and some form of contract is always needed to regulate and constrain any kind of transaction. So as an institution, contract is an indispensable and important part in the transaction between people. For nearly three decades, contract theory has developed rapidly and been widely applied in many aspects of social and economic life. The actual contract is incomplete because of the bounded rationality of human beings and the contracting cost. Therefore it is of important realistic significance for the perfection, development and application of traditional contract design theory to analyze the incompleteness of the traditional contract design model and improve the model based on the analysis.The dissertation conducts a study on the traditional contract design model and improves it based on the analysis of its basic assumption and incompleteness.The dissertation investigates the traditional moral hazard model and adverse selection model first. On the basis of the analysis of their basic assumptions, it discusses the incompleteness of moral hazard model and adverse selection model from the aspects of the result set, expectation of contract and the preference structure of participants emphatically.In view of the traditional moral hazard model that can only be defined on the verifiable set, the dissertation discusses how to improve the traditional model by using relational contract, and constructs two kinds of relational wage contract----second-order incentive wage contract (include punitive wage contract and incentive wage contract) and the expanded second-order incentive wage contract. It makes analysis on their feasibility and provides a feasibility solution for a special type of moral hazard problem.Against the disadvantage of the traditional moral hazard model that ignores the contract design process, the dissertation brings communication into the moral hazard contract design, discusses the impact of information exchange between two parties and how to make use of it to improve the moral hazard contract. Meanwhile, by improving the agent's reservation utility to compensate him for the risk of income uncertainty causing by the unexpected result, it builds an improved moral hazard model based on risk compensation.The dissertation also improves the traditional adverse selection model and discusses its equilibrium under multi-principal competitive situation. It gives the equilibrium condition when there are three or more types of agent and principals compete for attracting agents----the condition of "zero equilibrium profits" and the formalization description of the efficiency condition. And it studies the effect of the number of agent types on the competitive equilibrium and indicates that no equilibrium exists when there are three or more types of agent and principals compete for attracting agents.The dissertation studies the signaling model, discusses the incompleteness of the labor market model of Spence, and improves it from two aspects:considering the different demand of education in production, it proposes the concept of "broken production function curve" and discusses the equilibrium of model with "broken production function curve"; considering the signal "distortion" in signaling, it proposes the concept of "downward offset production function curve" and discusses the equilibrium of model with "downward offset production function curve".