Improving decision-making in principal-agent problems
The construction of infrastructure often requires high experience in the development of massive projects, thus the government subcontracts a private firm to construct and operate infrastructure. This type of agreement is called Public-Private Partnership (PPP), a common way to construct infrastructu...
- Autores:
-
Lozano Ramírez, Jorge Mario
- Tipo de recurso:
- Fecha de publicación:
- 2018
- Institución:
- Universidad de los Andes
- Repositorio:
- Séneca: repositorio Uniandes
- Idioma:
- eng
- OAI Identifier:
- oai:repositorio.uniandes.edu.co:1992/34405
- Acceso en línea:
- http://hdl.handle.net/1992/34405
- Palabra clave:
- Administración de proyectos de construcción
Proyectos de construcción
Contratos públicos
Construcción
Ingeniería
- Rights
- openAccess
- License
- https://repositorio.uniandes.edu.co/static/pdf/aceptacion_uso_es.pdf
| Summary: | The construction of infrastructure often requires high experience in the development of massive projects, thus the government subcontracts a private firm to construct and operate infrastructure. This type of agreement is called Public-Private Partnership (PPP), a common way to construct infrastructure in the late years. However, both entities make bad decisions (i.e., maintenance rates and inspection times), since they do not understand well enough the deterioration of the facility and the uncertainty associated with it. Besides, the information asymmetry between them and the existence of uncertainty linked to natural processes increase the complexity of the problem. We analyze the interaction between each entity and the effects of nature in the system to improve decision-making in PPPs. Then, we propose the optimal strategies each entity should perform in order to maximize their utility, through a dynamic model that takes into account the deterioration process of infrastructure, the entities? decisions embedded into the problem, and the time value of the cost of operating the system. Through a sensitivity analysis of the contract parameters, we demonstrate the importance of dynamic models in infrastructure development and show how the evolution of the system through time is important to understand the behavior of each decision maker. Additionally, a contractual procedure is constructed to help the government to ensure the best contract of the project because it will take into account the variability of natural processes and the financial incentives of the private sector. |
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