Formulating Principal-Agent Service Contracts for a Revenue Generating Unit

  • Shuo Zeng
  • Moshe Dror

Part of the SpringerBriefs in Operations Management book series (BRIEFSOPERMAN)

Table of contents

  1. Front Matter
    Pages i-ix
  2. Shuo Zeng, Moshe Dror
    Pages 1-2
  3. Shuo Zeng, Moshe Dror
    Pages 3-7
  4. Shuo Zeng, Moshe Dror
    Pages 9-18
  5. Shuo Zeng, Moshe Dror
    Pages 19-64
  6. Shuo Zeng, Moshe Dror
    Pages 65-105
  7. Shuo Zeng, Moshe Dror
    Pages 107-111
  8. Back Matter
    Pages 113-129

About this book


This book examines contractual options for a performance based contract between an owner of a revenue generating unit and a repair agent for such unit. The framework of the analysis 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 offer together with the agent's optimal service capacity response. In essence, the book provides an extensive formulating analysis of principal-agent contracts given any exogenous parameter values. Ultimately a small number of formulas cover a large spectrum of principal-agent conditions.


Freight Transport Pareto Optimal Contract Principal-agent Model Risk-averse Risk-neutral Risk-seeking

Authors and affiliations

  • Shuo Zeng
    • 1
  • Moshe Dror
    • 2
  1. 1.Eller College of ManagementUniversity of ArizonaTucsonUSA
  2. 2.Eller College of ManagementUniversity of ArizonaTucsonUSA

Bibliographic information

  • DOI
  • Copyright Information Springer International Publishing Switzerland 2016
  • Publisher Name Springer, Cham
  • eBook Packages Business and Management
  • Print ISBN 978-3-319-18671-9
  • Online ISBN 978-3-319-18672-6
  • Buy this book on publisher's site
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