Study On Incentive Mechanism Of The Construction Contractor Based On The Princeipal-agent Theory

Construction is an important component in the basic construction and is importantpart of our country’s economic development. However, the construction market hasmany problems at present. How to improve the construction market’s managementand the operation efficiency is meaningful. One of the key problems hard to solve arehow to motivate the contractor for the owners in the owners’ project management.The article analysised the one-time and the long-term cooperation between theowner and the contractor based on the game theory and information economics theory.The article tried to establish an incentive mechanism about the contractor from theowner’s angle. Firstly, it established short-term and long-term incentive models aboutthe contractor. In the short-term static incentive model, the fair preference theory andthe influence of the future reputation about the contractor was introduced. Meanwhile,in the long-term reputation and dynamic incentive model, the owner and contractor’scooperation phase was dived into N phases. Lastly, the article analsised the influenceof the parameters in the models and founded out the sensitivity factors through matlabsimulation experiment.Through the analysis of the models and the maltab simulation experiment, it couldget the following conclusion:1) the owner should try to avoid choose the contractorwho has high risk preference;2) The owner should consider the contractor’s equitypreference, because it would influence the incentive efficiency and form a new paretoimprovement;3) The reputation incentive means should use not only in long-termcooperation but also in one-time cooperation;4) Implicit incentives was a strongsupplement for explicit incentive. When some conditions meet, the owner couldrealize the incentive effect and Pareto improvement. In a word, the article provided atheory basis for the owner to establish a perfect and effective incentive mechanism.