Public Service Outsourcing Incentive Contract Design with Public Satisfaction Considered

Abstract

Contract outsourcing is regarded as an important means to improve public service level and save service cost. Aiming at the moral risk of service providers caused by information asymmetry in the process of outsourcing, this paper established a two-principal agency framework of public service outsourcing composed of the public, the government, and service providers, and designed the incentive contract of outsourcing to the public satisfaction under two conditions of complete information and incomplete information. Model analysis and simulation show that the introduction of public satisfaction into contracts can effectively improve service providers' efforts, reduce government agency costs, improve contract elasticity, and reduce moral risks. The research results provide decision reference and theoretical basis for government investment in high-quality and efficient public services.