Ambiguity Aversion and Cost-Plus Procurement Contracts

Preprint OPEN
Sujoy Mukerji;
  • Subject: procurement, incentive contracts, uncertainty aversion, cost-plus contracts, fixed price contracts
    • jel: jel:D80 | jel:D81 | jel:D82 | jel:D89

This paper provides a positive theory about the contractual form of procurement contracts under cost uncertainty. However, while the cost of manufacture is uncertain it can be reduced by an amount depending on the extent of effort exerted by the agent. The effort exerte... View more
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