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- Publisher Website: 10.1111/jems.12208
- Scopus: eid_2-s2.0-85017429726
- WOS: WOS:000414241700010
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Article: Signaling by an informed service provider
Title | Signaling by an informed service provider |
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Authors | |
Issue Date | 2017 |
Citation | Journal of Economics and Management Strategy, 2017, v. 26, n. 4, p. 955-968 How to Cite? |
Abstract | © 2017 Wiley Periodicals, Inc. We study a service provider, who, at the time of offering a contract, is better informed than the potential client. A service provider that is hired to increase the client's chance of a gain, an “enhancer,” may be better informed of whether the client has a big or small opportunity. A service provider that is hired to reduce the client's chance of a loss, a “problem solver,” may be better informed of whether the client has a big or small problem. We show that an enhancer predominantly offers a contingent contract, while a problem solver predominantly offers a flat fee due to their signaling incentives. This explains the differences in real-world contracts and also provides a novel explanation for the existence of low-powered incentive contracts. We evaluate the policy intervention that limits the contingent part of the service providers' contracts. |
Persistent Identifier | http://hdl.handle.net/10722/269760 |
ISSN | 2023 Impact Factor: 1.2 2023 SCImago Journal Rankings: 0.961 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Lee, Frances Xu | - |
dc.contributor.author | Fong, Yuk Fai | - |
dc.date.accessioned | 2019-04-30T01:49:30Z | - |
dc.date.available | 2019-04-30T01:49:30Z | - |
dc.date.issued | 2017 | - |
dc.identifier.citation | Journal of Economics and Management Strategy, 2017, v. 26, n. 4, p. 955-968 | - |
dc.identifier.issn | 1058-6407 | - |
dc.identifier.uri | http://hdl.handle.net/10722/269760 | - |
dc.description.abstract | © 2017 Wiley Periodicals, Inc. We study a service provider, who, at the time of offering a contract, is better informed than the potential client. A service provider that is hired to increase the client's chance of a gain, an “enhancer,” may be better informed of whether the client has a big or small opportunity. A service provider that is hired to reduce the client's chance of a loss, a “problem solver,” may be better informed of whether the client has a big or small problem. We show that an enhancer predominantly offers a contingent contract, while a problem solver predominantly offers a flat fee due to their signaling incentives. This explains the differences in real-world contracts and also provides a novel explanation for the existence of low-powered incentive contracts. We evaluate the policy intervention that limits the contingent part of the service providers' contracts. | - |
dc.language | eng | - |
dc.relation.ispartof | Journal of Economics and Management Strategy | - |
dc.title | Signaling by an informed service provider | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1111/jems.12208 | - |
dc.identifier.scopus | eid_2-s2.0-85017429726 | - |
dc.identifier.volume | 26 | - |
dc.identifier.issue | 4 | - |
dc.identifier.spage | 955 | - |
dc.identifier.epage | 968 | - |
dc.identifier.eissn | 1530-9134 | - |
dc.identifier.isi | WOS:000414241700010 | - |
dc.identifier.issnl | 1058-6407 | - |