Credibly Confidential Contracts

More companies have realized that information technology (IT) outsourcing, once viewed as a cost reduction tool, could facilitate and even enable the transformation of their core business processes. The benefits from a potential outsourcing relationship expansion have strategic implications for relational incentive provision. Modeling "information poaching" in IT outsourcing as an incentive problem with contractibility constraints, our analysis shows that this problem could be mitigated in a repeated game where the outsourcing client and the service provider agree on a relational contract. When the two partners share the belief that they can potentially benefit from a future relationship expansion, they are more likely to behave cooperatively during the early stages of their relationship. However, when they disagree about the likelihood of the future relationship expansion, they will have different preferences on a set of otherwise equivalent relational bonus contracts. Specifically, they will adopt a relational contract with large but infrequent bonuses when the client is more optimistic than the service provider about the potential of their relationship. Because these results hold even when the sourcing partners' beliefs are very close to each other, our analysis sheds fresh light on the issue of equilibrium selection in relational contract theory. In the context of IT outsourcing, the results of this study suggest that, because salient forms of relational bonuses are often not adopted, relational incentive provision is likely more pervasive than what we can observe.

This paper explores the role of supplier performance measures (scorecards and others) in the internal design of relational contracts. We analyze a simple supplier–buyer repeated interaction in which incentives arise by the threat of terminating the relationship—temporarily or permanently. As the periods with no‐trade reduce the value of the relationship, the optimal relational contract minimizes the equilibrium punishment while preserving the supplier's incentives. We show that making the relational penalties conditional on additional supplier's performance measures increases total surplus. We also provide a rationale for “forgiveness” in relational contracting. The buyer may optimally forgive (decide not to sanction at all or to impose a lesser sanction) the supplier despite a bad outcome when some additional information is positive. We start with a binary performance measure, but we extend our analysis to more complex performance measures such as scorecards. Finally, we rank the scorecards in terms of their informativeness and we characterize the optimal investment in the design and improvement of these performance measures.

We analyze optimal incentive contracts in a model where the probability of court enforcement is determined by the costs spent on contracting. We show that contract costs matter for incentive provision, both in static spot contracts and repeated game relational contracts. We find that social surplus may be higher under costly relational contracting than under costless verifiable contracting, and show that there is not a monotonic relationship between contracting costs and incentive intensity. In particular we show that an increase in contracting costs may lead to higher-powered incentives. Moreover we formulate hypotheses about the relationship between legal systems and incentive provision, specifically the model predicts higher-powered incentives in common law than in civil law systems.

I develop a model of nonstationary relational contracts in order to study internal wage dynamics. Workers are heterogeneous, and each worker’s ability is both private information and fixed for all time. Learning therefore occurs within employment relationships. The inferences, however, are confounded by moral hazard. Incentive provision is restricted by an inability to commit to long‐term contracts. Relational contracts, which must be self‐enforcing, must therefore be used. The wage dynamics in the optimal contract, which are pinned down by the tension between incentive provision and contractual enforcement, are intimately related to the learning effect.

This paper analyzes a multitask Principal-Agent model in which the performance measures of some tasks are subjective and relational contract is needed for incentive provision. We find that rewarding the Agent based on a subjective measure that aggregates performance on multiple tasks can help ease the tension between motivating the Agent by offering a bonus and the Principal's temptation to renege on bonus payment, which helps reduce the threshold discount factor for relational contract to be self-enforcing. Consequently, when some dimensions of performance can not be objectively determined, it may be optimal not to use explicit for incentive provision even if other dimensions of performance can be objectively measured and there is no cost of writing explicit contracts. We therefore offer a novel explanation to excessively incomplete contracts observed in practice.

The aim of this study was to identify and classify stakeholders in the 2022 Beijing Winter Olympic venues and to examine the stakeholders’ interest demands and work relationships with other entities as they pursue effective strategies of cooperative governance. We conducted an extensive literature review, analyzed documents related to the Games and other related international sporting events, investigated the financial statements of the 2022 Games venues, and used semi-structured interviews (n = 7) to address the research questions. Findings show that key stakeholders in venues for the 2022 Games include the following: central government, local government, International Olympic Committee, organizing committee of the 2022 Games, financial investors, infrastructure builders, event operators, financing companies, marketing firms, media companies, professional experts, non-governmental organizations, and the general public. The conflicts among stakeholders exist between government departments and market players, between government departments and the social public, and between the central government and local governments. Internal and external conflicts exist in contractual relationships, internal contractual relationships, and operational contractual relationships. Resolving these issues is necessary to enhance the effectiveness of venue operations and preparedness for the 2022 Games.

Introduction:Integrated care systems as well as accountable care organisations (ACOs) in the US and similar concepts in other countries are advocated as an effective method of improving the performance of healthcare systems. These systems outline a payment and care delivery model that intends to tie provider reimbursements to predefined quality metrics. By this the total costs of care shall be reduced. When designing healthcare options contractors are faced with a variety of financial options. The costs of market utilisation are highly relevant for the conception of healthcare contracts; furthermore contract-specific investments are an obstacle to the efficient operation of ACOs.Methods:A comprehensive literature review on methods of designing contracts in Integrated Care was conducted. This article is the second in a row of three that are all published in this issue and contribute to a specific issue in designing healthcare contracts. The first dealt with the organisation of contracts and information asymmetries, while part 3 concludes with the question of risk management and evaluation. The specific research question of this second article focusses on the financial options and reimbursement schemes that are available to define healthcare contracts.Results:A healthcare contract is a relational contract, which determines the level of reimbursement, the scope of services and the quality between service providers and payers, taking account of the risks relating to population and performance. A relational contract is an agreement based upon assumption of a longer timeframe. A major obstacle to the practical implementation of healthcare contracts is the prognosis of the inflows and outflows due to the actuarial risks of the insured population. Financing conditions and reimbursement arrangements that are based on a prospectively determined fixed price, have a significant drawback: it is very difficult to take the differences in health status and the utilisation of distinct insured clientele (panel) into account.Discussion and Conclusion:The first two articles of this series on contract design have shown that complete contracts in healthcare are unrealistic. Healthcare reimbursement contracts are incomplete contracts with a high degree of uncertainty. In incomplete contracts specific contractual regulations are not made for any eventuality. For this reason it is important that the parties agree on the prevention of endogenous risks (asymmetric information after the conclusion of the contract) and on the procedure in the case of unforeseen circumstances (the risks of random, parameter risk and change risks to the healthcare program).

This paper explores the use of the concept of the psychological contract in investigating the experience of volunteers and its potential to help develop strategies to attract, retain, and support volunteers and the mission of non‐profit organizations who their efforts support, through a systematic review of what we know about the psychological contract in relation to volunteers. Following the PRISMA, PIECES, and Warwick protocols, we conducted a search of empirical research in business and broader social sciences and humanities databases. From the initial 6,042 studies reviewed, 29 met the inclusion criteria that focused on peer‐reviewed journal articles published in English. The research questions and findings investigated by these studies were categorized using Alcover, Rico, Turnley, and Bolino's (2017) multiple‐exchange model of the PC: PC formation and development, information‐seeking behavior, identification (of the nature of the PC), PC fulfillment, and PC breach. We propose new directions for research on PC and volunteering, including suggestions for research methods and contexts.

The need to provide alternative forms of justice to ordinary courts in the European context has been considered a fundamental chapter in consumer protection policies for many years, addressing the so-called “weaker party£ in a contractual relationship. The evolution of European legislation and the proliferation of alternative systems have “mandated” supranational legislative involvement aimed at standardising and harmonising national regulations on Alternative Dispute Resolution (ADR). This paper addresses the following research question: do we need a European unified code for consumer ADR? Well, it is crucial to conduct research on the scope of using such tools, the adopted procedural rules, and, above all, whether and how the so-called right to effective remedy under EU law has been respected. An example is the case C-75/2016 L. Menini M. Rampanelli v. Banco Popolare - Società Cooperativa. In this regard, for a comprehensive and diversified overview of the topic, particular attention will be given to the creation of a European unified code where the effectiveness of protection receives new and more significant importance. In this perspective, the possibility of creating a code will be examined from the Italian standpoint, where the legislature has hinted at the introduction of a unified text for alternative dispute resolution instruments, the so-called TUSC. However, despite being expressly provided for in the principles and indications of Article 1, paragraph 4, letter b, of Law Delegation No. 206/2021, it has remained a dead letter. It is from this case, which still lacks concrete application, that we want to start highlighting the need for a comparison between the level of protection offered by national regulations and the minimum standard of protection guaranteed in other states, from which a supranational code for consumer ADR could emerge.

ABSTRACTAs a result of a number of recent developments, such as the milk strike in several European countries in 2008 and the planned expiration of the European milk quota scheme in 2015, it is necessary to redesign contractual relationships in the dairy industry. However, fostering acceptance of new stipulations (e.g., volume control, pricing systems) requires that the attitudes of farmers be taken into consideration. Thus, in this article, the authors analyze how dairy farmers’ attitudes vary towards both contracting in general and specific contract attributes. Using a survey of 161 dairy farm managers, the research question is addressed by means of a latent class cluster analysis. Three clusters are identified. Their attitudes are heterogeneous, ranging from suppliers who are clearly convinced of the value of contractual relationships to farmers who reject contracts explicitly. Results may be utilized to match the preferences of farmers regarding contracts with modified dairy marketing contracts. [EconLit Classification: Q130].

Research question: How do architecture, engineering, and construction (AEC) professionals overcome the most prevalent barriers of implementing IPD? Purpose: To investigate how successful IPD projects overcome legal, cultural, financial, and technological barriers in an effort to achieve wider adoption of IPD by the industry and to provide lessons learned to industry professionals interested in implementing IPD as a delivery method. Research Design: A brief review of the current situation of the AEC industry; semistructured interviews with leading AEC professionals in nine IPD projects. Findings: The study finds that successful IPD projects are achieved through proper selection and involvement of all main players as well as these main players achieving trust in each other. Training, procurement ability, and collaborative technology are also among the key factors for a successful transition to IPD. Limitations/Implications: Eight out of nine cases are from the state of California. Value for Practitioners: This paper highlights common barriers that currently exist in implementing IPD and provides lessons learned to practitioners in order to overcome these barriers. Keywords: integrated project delivery (IPD), barriers, relational contracts, insurance, compensation, collaboration, integration Paper type: Full paper

The health care industry is being transformed. Large firms are merging and acquiring other firms. Alliances and contractual relations between players in this market are shifting rapidly. Within the next few years, many markets are predicted to be dominated by a few large firms. Antitrust enforcement authorities like the Department of Justice and the Federal Trade Commission, as well as courts and legislators at both the federal and state levels, are struggling with the implications of these changes for the nature and consequences of competition in health care markets. In this paper, we summarize the nature of the changes in the structure of the health care industry. We will focus on the markets for health insurance, hospital services, and physician services. We will discuss the potential implications of the restructuring of the health care industry for competition, efficiency, and public policy. As will become apparent, this area offers a number of intriguing questions for inquisitive researchers.

The health care industry is being transformed. Large firms are merging and acquiring other firms. Alliances and contractual relations between players in this market are shifting rapidly. Within the next few years, many markets are predicted to be dominated by a few large firms. Antitrust enforcement authorities like the Department of Justice and the Federal Trade Commission, as well as courts and legislators at both the federal and state levels, are struggling with the implications of these changes for the nature and consequences of competition in health care markets. In this paper we summarize the nature of the changes in the structure of the health care industry. We will focus on the markets for health insurance, hospital services, and physician services. We will discuss the potential implications of the restructuring of the health care industry for competition, efficiency, and public policy. As will become apparent, this area offers a number of intriguing questions for inquisitive researchers.

This thesis, a collection of three essays, focuses primarily on modelling conditional expectations and investigates the central research question: is the ex-ante market risk premium always positive? Many asset pricing studies have focused on testing linear restrictions imposed by asset pricing models and largely ignore another important restriction: the positivity of the market risk premium. Aiming to enhance our understanding in this area, the first essay applies a novel market-based measure of conditional expected return, namely, the implied cost of capital, and examines whether or not the ex-ante risk premium is always positive. Employing economically meaningful information variables and a multiple inequality constraints framework, I find evidence that this positive condition is violated not only in the US, but also in other major international markets including Japan, Italy, and Germany. In stark contrast, when the realised return is used to proxy for the expected return, there is insufficient evidence against the hypothesis due to a high degree of noise embedded in the realised return proxy. Accordingly, I argue for the use of the implied cost of capital in modelling the time varying expected return. In the second essay, I further examine the positive risk premium hypothesis. Specifically, I introduce a new two-stage method, involving Principal Component Analysis and Boosted Regression Tree to model conditional expected return. With these techniques, I address potential pitfalls associated with existing methods of capturing the true identity of investors’ information sets, and how investors use the information in forming expectations. Consistent with the first essay’s finding, the positivity condition of the risk premium is violated in the US. Collectively, the evidence suggests the rejection of the Conditional Capital Asset Pricing Model. The implied cost of capital is appealing in its own right, yet its validity as a proxy for conditional expected return is open to debate. Returning to this measure, the third study investigates when and to what extent this estimate deviates from true expectations. In a simulation study allowing for time varying discount rates, I find that due to the constant term structure assumption embedded in the research method, the variation of the implied cost of capital is significantly lower than that of the true expected return. This feature reveals that in a standard regression, the economic significance interpretation of the coefficient is no longer appropriate. Additionally, I show analytically that when analyst forecasts are biased and/or unable to capture the full information of cash flow expectations incorporated in the market price, the derived implied cost of capital is contaminated. Moreover, there exists a real issue regarding spurious regressions involving the implied cost of capital.

This paper provides an analysis of the link between the global market for crude oil and oil futures risk premium at the aggregate level. It offers empirical evidence on whether the compensation for risk required by the speculators depends on the type of the structural shock of interest. Understanding the response of the risk premium to unexpected changes in the price of oil can be useful to address some research questions, among which: what is the relationship between crude oil risk premium and unexpected rise in the price of oil? On average, what should speculators expect to receive as a compensation for the risk they are taking on? This work is based on a Structural Vector Autoregressive (SVAR) model of the crude oil market. Two main results emerge. First, the impulse response analysis provides evidence of a negative relationship between the risk premium and the changes in the price of oil triggered by shocks to economic fundamentals. Second, this analysis shows that the historical decline of the risk premium can be modelled as a part of endogenous effect of the oil market driven shocks.