Quality Incentive Mechanism Design of Construction Project: Quality Rank-Order Tournaments Model and Optimal Prizes Allocation in the Parallel Contracting Mode

Abstract

In the parallel contracting mode with characteristics of single client and several contractors in construction phase, quality rank-order tournaments is analyzed whether it can incentive contractors to improve quality or not from the angle of client by applying the correlation theory and technique of Game theory and Economics of Information. Quality rank-order tournaments game model is established, the optimal allocation of prizes is studied when the contractors' cost functions are convex. The result shows that in different conditions different optimal allocation of prizes should be adopted such as single prize or several positive prizes, furthermore, the optimal structure of prizes when several prizes are adopted is given.