Incentives and contract design for knowledge sharing in construction joint ventures

Abstract

Employing the differential game theory, this study proposes the dynamic incentive model for knowledge sharing in Design-Build joint ventures (DBJVs) under three types of contracts: no cost-sharing contract (NCSC), cost-sharing contract (CSC) and centralized decision-making contract (CDMC). The analytic model and numerical analysis approach are used to compare solutions in the three scenarios. The results indicate that the optimal amount of shared knowledge and the optimal payoff under the CDMC are both the highest. Besides, the leader will offer part of the knowledge sharing cost for the follower if the leader gets more than one-third payoff of the system. Compared with the NCSC, the system payoff under the CSC increases greatly, which is much larger than the payoff increment from the CSC to the CDMC. Furthermore, empirical evidence on major findings are provided. This research contributes to the literature on knowledge sharing in joint ventures.