scholarly journals Reducing information asymmetry and building trust in projects using blockchain technology

2021 ◽  
Vol 73 (10) ◽  
pp. 967-978
Keyword(s):  
Information Asymmetry ◽  
Construction Projects ◽  
Construction Project ◽  
The Other ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Building Trust ◽  
Blockchain Technology ◽  
Project Participants

The success of every construction project is highly dependent on effective communication and trust between key project participants. It is assumed that all participants in the project will work smoothly together to complete the project. Nevertheless, according to the principal-agent theory, there is information asymmetry between project participants because they also have their own self-interests. Information asymmetry is the situation in which one of the two parties is better informed than the other. Due to complexity of construction projects and the number of participants involved, implementation of blockchain technology would reduce information asymmetry. This paper provides a framework for implementation of blockchain technology in construction projects so as to reduce information asymmetry and enhance trust between project participants. Blockchain technology ensures that all project participants have access to all the information exchanged between them over the duration of the project, and thus helps in developing a more trustful relationship between them.

scholarly journals STRATEGIES FOR AVOIDING ASYMMETRIC INFORMATION IN CONSTRUCTION PROJECT MANAGEMENT

2008 ◽  
Vol 9 (1) ◽  
pp. 47-51 ◽  
Author(s):  
Martin Schieg
Keyword(s):  
Project Management ◽  
Asymmetric Information ◽  
Construction Project ◽  
Principal Agent ◽  
Asymmetric Distribution ◽  
Construction Project Management ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Project Participants

A construction project is characterized by a high number of project participants and a multitude of contract relations. The Principal Agent Theory deals with the design of contracts, especially with respect to asymmetric information. Asymmetric distribution of information in co‐operations can have effects before as well as after closing a contract. In construction project management therefore attention has to be paid to where information imbalances occur. Several methods are known with which one can cope with the resulting problems but which in turn cause costs.

scholarly journals Research on Preventing Moral Hazard of Construction Project Based on Information Asymmetries

2014 ◽  
Vol 8 (1) ◽  
pp. 468-475 ◽  
Author(s):  
Pengcheng Xiang ◽  
Jinan Wang
Keyword(s):  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Optimization Model ◽  
Construction Project ◽  
Principal Agent ◽  
Information Asymmetries ◽  
Major Objective ◽  
Principal Agent Theory ◽  
Agent Theory

There exists the problem of information asymmetry among the participants in construction project who form economic partnerships one another. Information asymmetries among the participants in construction project places a premium on adverse selection and moral hazard. The major objective of this article is to implement the mechanisms of incentive and monitoring under the framework of principal-agent theory in analysis of moral hazard of construction project and to explore how to prevent it. The optimization model of incentive and monitoring under the circumstance of asymmetric information will be founded on the basis of the analysis of the effect of incentive and monitoring mechanisms in the principal- agent relationship. It indicates that reliability of information can be increased when bringing incentive and monitoring mechanisms into reward contract, which can prevent moral hazard of construction project.

Study on incentive and supervision mechanisms of technological innovation in megaprojects based on the principal-agent theory

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jiawei Liu ◽  
Guanghong Ma
Keyword(s):  
Risk Assessment ◽  
Information Asymmetry ◽  
Technological Innovation ◽  
Effective Means ◽  
Unit Cost ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Content Type ◽  
Agent Theory ◽  
Incentive Intensity

PurposeThe high uncertainty of technological innovation in megaprojects brings great challenges to the R&D institution and also acts as a trigger for moral hazard. The incentive and supervision are effective means to improve the performance of innovation. The purpose of this paper is to propose appropriate incentive and supervision mechanisms to reduce information asymmetry and improve the efficiency of incentives. Suggestions on technological innovation are put forward to megaprojects management.Design/methodology/approachAccording to the principal-agent theory, the research develops incentive models under three states, i.e. information symmetry, information asymmetry and information asymmetry based on supervision mechanism. The Bayesian theory is employed to prove the effectiveness of the novel supervision method based on risk assessment.FindingsThe results indicate that under the information asymmetry, the incentive intensity is positively correlated with the social benefits coefficient, and negatively correlated with the patent benefits coefficient. The R&D effort and the owner's incentive intensity decline with the increase of information asymmetry. The supervision of risks can effectively reduce the degree of information asymmetry, and the higher the uncertainty of innovations, the more significant the effect of supervision is. As the supervision intensity increases, the incentive intensity, the R&D effort and the innovation output will increase. In addition, the R&D institutions with high innovation capability, low unit cost of R&D and low risk-aversion are more willing to make efforts to innovate.Originality/valueThis study fills the research gap on incentive and supervision of technological innovation in megaprojects. The externality of innovation benefits is considered in the model. The traditional incentive model is extended through the introduction of supervision. Furthermore, a novel supervision method based on risk assessment is proposed. The results validate the importance of risk management in technological innovation and provide a new insight for project management.

scholarly journals What is the Contribution of the Theory of Redistribution Systems to the Theory of Corruption?

2013 ◽  
Vol 13 (2) ◽  
pp. 92-107 ◽  
Author(s):  
Tomáš Otáhal ◽  
Milan Palát ◽  
Petr Wawrosz
Keyword(s):  
Economic Policy ◽  
Economic Development ◽  
Rent Seeking ◽  
The Other ◽  
Principal Agent ◽  
Alternative Theory ◽  
Policy Recommendations ◽  
Barriers To Entry ◽  
Principal Agent Theory ◽  
Agent Theory

Abstract Scholars making economic policy recommendations to resolve corruption problem use several approaches, the most dominant of which are the principal-agent and rent-seeking theories. In this paper, we argue that the principal-agent theory has problems to account for the environment in which the agents offering and accepting corruption operate, and explain the importance of agents for survival of their environment. The rent-seeking theory, on the other hand, finds it difficult to establish socially effective legislation and ways to determine the barriers to entry that motivate agents to behave corruptly. Both problems, however, are vital for solving the problem of corruption. Lacking the knowledge of the agent’s environment (system) and their significance for survival of the system, the theory cannot define incentives that would discourage the agent from acting in a corrupted way. If the rent-seeking theory does not determine the barriers to entry that motivate agents to behave corruptly, it cannot determine the proper legislation that would deter corrupt behaviour and lead to economic development. For these reasons we investigate if both problems can be explained and solved within the alternative theory of redistribution systems and its part - the theory of parallel redistribution games.

scholarly journals Seller Reviews and Consumers' Perceptions of Trust, Risks, and Uncertainty

2019 ◽  
Vol 10 (4) ◽  
pp. 1-20
Author(s):  
Jing Yang ◽  
Rathindra Sarathy ◽  
Tao Wu
Keyword(s):  
Text Mining ◽  
Information Asymmetry ◽  
Principal Agent ◽  
Hidden Information ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Unique Approach ◽  
Hidden Action ◽  
Quasi Experiment

Based on the principal-agent theory, the authors posit that seller-related uncertainty is derived from buyer (the principal) fears of hidden information (information asymmetry) and hidden action (seller opportunism) on the part of sellers (the agents). The study evaluates the effects of the three antecedents of trust in the seller reviews context with a quasi-experiment. The authors enhance the validity of the research manipulation through a unique approach of creating reviews through a text mining process of actual seller reviews. This allows control over the content of reviews while retaining their realism. The findings validate that the principal-agent theory provides a good fit for understanding seller-related uncertainty in e-commerce transactions. Second, buyers appear to be more concerned about seller opportunism than with information asymmetry. Third, while assessments of integrity and competence of the vendor, assessed through reviews, play a role, benevolence does not.

scholarly journals Incentive Contract in Supply Chain with Asymmetric Information

2014 ◽  
Vol 2014 ◽  
pp. 1-6 ◽  
Author(s):  
Yingsheng Su ◽  
Hongmei Guo ◽  
Xianyu Wang
Keyword(s):  
Supply Chain ◽  
Asymmetric Information ◽  
Information Asymmetry ◽  
Principal Agent ◽  
Incentive Contract ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Hide Information ◽  
Technology Level ◽  
Theory Of Regulation

The supply chain always appears inefficient because of the different targets of members and information asymmetry, especially when upstream enterprises not only hide information about their effort levels, but also hide information about their technology level. The paper uses principal-agent theory and the theory of regulation to design the contract to realize the maximization of principal's profit on the condition that the contract satisfies the participant and incentive conditions of agent. As a result, it is obvious that the contract achieves the goal of control. In addition, it also can be concluded that the amount of rent that the manufacturer can obtain is up to the value of his information and the condition of his resource.

Principal Agent Theory and Artificial Information Asymmetry

Politics ◽  
2009 ◽  
Vol 29 (2) ◽  
pp. 137-144 ◽  
Author(s):  
Stephan Poth ◽  
Torsten J. Selck
Keyword(s):  
Information Asymmetry ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Agent Theory

Analysis of Conspiracies between Contractors and Supervisors in Constructions

2011 ◽  
Vol 121-126 ◽  
pp. 4386-4390
Author(s):  
Lei Zhao ◽  
Sheng Zhong
Keyword(s):  
Mathematical Model ◽  
Construction Projects ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Constraint Method

Owners, contractors and supervisors are key members included in construction projects. There are two kinds of principal-agent relationships among the three parties. Out of the consideration of maximizing the interests of owners, the author of this article integrates the three parties--owners, contractors and supervisors into a mathematical model, designs corresponding anti-conspiracy constraint method to prevent the conspiracy act of contractors and supervisors, and studies the game relationship among the three parties--owners, contractors and supervisors using the principal - agent theory.

scholarly journals Study on Third-Party supervision of Major Ecological Ecological Projects Auditing Based on Principal-agent Theory

2019 ◽  
Vol 79 ◽  
pp. 03009
Author(s):  
Liang Zhao ◽  
Chuiyong Zheng
Keyword(s):  
Information Asymmetry ◽  
Audit Quality ◽  
Third Party ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Agent Model ◽  
Agent Theory ◽  
Incentive Policy ◽  
Principal Agent Model ◽  
The Government

Without considering the existence of third-party audit supervision and considering the existence of third-party audit supervision, the principal-agent model of major engineering audits between government and audit organizations was constructed. The analytical solutions under various hypothetical conditions were analyzed for the government. The optimal incentive policy for major engineering audits provides the basis. The analysis results prove that, the introduction of third-party units for audit supervision can effectively stimulate audit behavior, reduce information asymmetry, and create higher engineering quality and audit quality in the process of major engineering audit.

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