Quality incentive contract design in government procurement of public services under dual asymmetric information

Abstract

In the process of government procurement of public services (GPPS), adverse selection and moral hazard caused by dual asymmetric information can damage public interests and negatively affect the quality of public services. To improve the quality of GPPS, in this study, quality incentive contract models under the condition of dual asymmetric information are designed. These models are based on the optimal incentive contract model in principal–agent theory. The results show that under dual asymmetric information conditions, incentive contracts designed for a continuous type of service capability can identify and stimulate the service abilities of social organizations.