scholarly journals Optimal Incentive Contract for Sales Team with Loss Aversion Preference

Symmetry ◽  
2019 ◽  
Vol 11 (7) ◽  
pp. 864
Author(s):  
Chao Li ◽  
Si-Jie Cheng ◽  
Peng-Fei Cheng
Keyword(s):  
Loss Aversion ◽  
Backward Stochastic Differential Equation ◽  
Optimal Contract ◽  
Market Demand ◽  
Agent Model ◽  
Asymmetrical Information ◽  
Manufacturing Enterprises ◽  
Sales Team ◽  
Multi Agent ◽  
Martingale Representation Theorem

When manufacturing enterprises employ sales team (or multiple salesmen) to sell products, there is asymmetric information such as the ability and efforts salesmen. Enterprises can use contracts to incentivize salesmen to work hard to maximize their profits. Assuming that market demand is sensitive to effort, and the salesman can exploit the market by increasing effort, a multi-agent model is established for the case of symmetrical information and asymmetrical information, in which the sales team has a loss aversion preference. In this multi-agent model, the agents’ utility function is non-concave and cannot be solved by traditional methods. We use a backward stochastic differential equation (BSDE) to represent agents’ contract through the martingale representation theorem and use the stochastic optimal control and matrix method to obtain the explicit solution of the optimal contract. Based on the conclusions of the research, an empirical analysis is made on the sales team of an enterprise.

Team Incentives and Bonus Floors in Relational Contracts

2020 ◽  
Vol 95 (6) ◽  
pp. 181-212
Author(s):  
Jonathan C. Glover ◽  
Hao Xue
Keyword(s):  
Performance Measures ◽  
Team Performance ◽  
Performance Measure ◽  
Relational Self ◽  
Relational Contracts ◽  
Optimal Contract ◽  
Agent Model ◽  
Strategic Complementarity ◽  
Multi Agent ◽  
The Individual

ABSTRACT Teamwork and team incentives are increasingly prevalent in modern organizations. Performance measures used to evaluate individuals' contributions to teamwork are often non-verifiable. We study a principal-multi-agent model of relational (self-enforcing) contracts in which the optimal contract resembles a bonus pool. It specifies a minimum joint bonus floor the principal is required to pay out to the agents, and gives the principal discretion to use non-verifiable performance measures to both increase the size of the pool and to allocate the pool to the agents. The joint bonus floor is useful because of its role in motivating the agents to mutually monitor each other by facilitating a strategic complementarity in their payoffs. In an extension section, we introduce a verifiable team performance measure that is a noisy version of the individual non-verifiable measures, and show that the verifiable measure is either ignored or used to create a conditional bonus floor.

Study on Intelligent Reconfigurable Automobile Manufacturing System Model

2013 ◽  
Vol 312 ◽  
pp. 460-463
Author(s):  
Jian Bin Wang ◽  
Wei He
Keyword(s):  
Production Management ◽  
Manufacturing System ◽  
System Model ◽  
Multi Agent System ◽  
Automotive Manufacturing ◽  
Agent Model ◽  
Automobile Manufacturing ◽  
Manufacturing Enterprises ◽  
Agent Theory ◽  
Multi Agent

An intelligent reconfigurability model based on multi-agent theory was proposed in this paper to improve feasibility of automotive manufacturing system. Each production management department in automobile manufacturing enterprises was designed as an independent agent. The practicability and rationality of the manufacturing system model was simulated as communication and interactive between different agents in this multi-agent system through JAFMAS. The application of multi-agent model in the design of automobile manufacturing system can promote the reconfigurability and intelligent level of the system.

scholarly journals Binary Payment Schemes: Moral Hazard and Loss Aversion

2010 ◽  
Vol 100 (5) ◽  
pp. 2451-2477 ◽  
Author(s):  
Fabian Herweg ◽  
Daniel Müller ◽  
Philipp Weinschenk
Keyword(s):  
Moral Hazard ◽  
Expected Utility ◽  
Loss Aversion ◽  
Reference Point ◽  
Performance Measure ◽  
Principal Agent ◽  
Optimal Contract ◽  
Agent Model ◽  
Payment Schemes ◽  
Principal Agent Model

We modify the principal-agent model with moral hazard by assuming that the agent is expectation-based loss averse according to Kőoszegi and Rabin (2006, 2007). The optimal contract is a binary payment scheme even for a rich performance measure, where standard preferences predict a fully contingent contract. The logic is that, due to the stochastic reference point, increasing the number of different wages reduces the agent's expected utility without providing strong additional incentives. Moreover, for diminutive occurrence probabilities for all signals the agent is rewarded with the fixed bonus if his performance exceeds a certain threshold. (JEL D82, D86, J41, M52, M12)

Research on multi-agent model based on track methodology of ontology building

2009 ◽  
Vol 29 (2) ◽  
pp. 412-415
Author(s):  
Qiang LU ◽  
Ming CHEN ◽  
Zhi-guang WANG
Keyword(s):  
Agent Model ◽  
Model Based ◽  
Multi Agent ◽  
Ontology Building

scholarly journals A Novel Multi-Agent Model for Robustness with Component Failure and Malware Propagation in Wireless Sensor Networks

Sensors ◽  
2021 ◽  
Vol 21 (14) ◽  
pp. 4873
Author(s):  
Biao Xu ◽  
Minyan Lu ◽  
Hong Zhang ◽  
Cong Pan
Keyword(s):  
Wireless Sensor ◽  
Component Reliability ◽  
Agent Based ◽  
Agent Model ◽  
Cross Domain ◽  
Malware Propagation ◽  
Network Topologies ◽  
Multi Agent ◽  
Agent Characteristics ◽  
Information Domain

A wireless sensor network (WSN) is a group of sensors connected with a wireless communications infrastructure designed to monitor and send collected data to the primary server. The WSN is the cornerstone of the Internet of Things (IoT) and Industry 4.0. Robustness is an essential characteristic of WSN that enables reliable functionalities to end customers. However, existing approaches primarily focus on component reliability and malware propagation, while the robustness and security of cascading failures between the physical domain and the information domain are usually ignored. This paper proposes a cross-domain agent-based model to analyze the connectivity robustness of a system in the malware propagation process. The agent characteristics and transition rules are also described in detail. To verify the practicality of the model, three scenarios based on different network topologies are proposed. Finally, the robustness of the scenarios and the topologies are discussed.

scholarly journals Coping with Loss Aversion in the Newsvendor Model

2015 ◽  
Vol 2015 ◽  
pp. 1-11 ◽  
Author(s):  
Jianwu Sun ◽  
Xinsheng Xu
Keyword(s):  
Expected Utility ◽  
Loss Aversion ◽  
Confidence Level ◽  
Profit Maximization ◽  
Optimal Order ◽  
Market Demand ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Decision Bias ◽  
Optimal Order Quantity

We introduce loss aversion into the decision framework of the newsvendor model. By introducing the loss aversion coefficientλ, we propose a novel utility function for the loss-averse newsvendor. First, we obtain the optimal order quantity to maximize the expected utility for the loss-averse newsvendor who is risk-neutral. It is found that this optimal order quantity is smaller than the expected profit maximization order quantity in the classical newsvendor model, which may help to explain the decision bias in the classical newsvendor model. Then, to reduce the risk which originates from the fluctuation in the market demand, we achieve the optimal order quantity to maximize CVaR about utility for the loss-averse newsvendor who is risk-averse. We find that this optimal order quantity is smaller than the optimal order quantity to maximize the expected utility above and is decreasing in the confidence levelα. Further, it is proved that the expected utility under this optimal order quantity is decreasing in the confidence levelα, which verifies that low risk implies low return. Finally, a numerical example is given to illustrate the obtained results and some management insights are suggested for the loss-averse newsvendor model.

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