Moral hazard analysis of supply chain under the model of principal-agent with information asymmetry

• Published in: 2012 International Conference on Information Management, Innovation Management and Industrial Engineering Vol. 2; pp. 232 - 234
• Main Authors: Lixian Xing, Wei Han, Zihan Wang
• Format: Conference Proceeding
• Language: English
• Published: IEEE 01-10-2012
• Subjects: asymmetric information; Contracts; Educational institutions; Gold; Hazards; Inspection; Irrigation; mora hazard; principal-agent model; Reliability; supply chain
• ISBN: 1467319325; 9781467319324
• ISSN: 2155-1456; 2155-1472
• DOI: 10.1109/ICIII.2012.6339820

With the rising costs of labor and raw materials, more and more serious moral hazard appear between the supply chain this year, especially the risk of moral. Moral hazard problems of the supply chain more and more concern by the insiders. This paper studies the problem of supply chain moral hazard under the model of the principal-agent with information asymmetry. Simulations are carried out which are based on the example of raw material suppliers, manufacturers, and government regulatory agencies that are subjected to a certain product. It leads to the conclusion that moral hazard will be affected by the detection accuracy of manufacturer, the detection accuracy of government regulatory agencies and the probability of responsibility identified by government regulatory agencies.