Make-or-Buy Decisions and the Manipulability of Performance Measures
(2011) In Journal of Theoretical Economics 11(1).- Abstract
- The make-or-buy decision is analyzed in a simple framework combining contractual incompleteness with the existence of an imperfect but contractible performance measure. Contractual incompleteness gives rise to two regimes, identified with make and buy. The performance measure on which comprehensive contracts can be written is imperfect in the sense of being subject to manipulation. The performance incentives faced by the agent are stronger in the “buy” regime. A positive (negative) impact – or ”externality” – of manipulation on true performance favors make (buy).
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/2205520
- author
- Andersson, Fredrik LU
- organization
- publishing date
- 2011
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- make-or-buy decision, manipulation, outsourcing
- in
- Journal of Theoretical Economics
- volume
- 11
- issue
- 1
- publisher
- Berkeley Electronic Press
- external identifiers
-
- wos:000297592200002
- scopus:82955177061
- ISSN
- 1935-1704
- DOI
- 10.2202/1935-1704.1790
- language
- English
- LU publication?
- yes
- id
- 74ad6763-9eb0-464c-98a8-827cde17b4af (old id 2205520)
- alternative location
- http://www.bepress.com/bejte
- date added to LUP
- 2016-04-01 13:25:32
- date last changed
- 2022-01-27 19:08:38
@article{74ad6763-9eb0-464c-98a8-827cde17b4af,
abstract = {{The make-or-buy decision is analyzed in a simple framework combining contractual incompleteness with the existence of an imperfect but contractible performance measure. Contractual incompleteness gives rise to two regimes, identified with make and buy. The performance measure on which comprehensive contracts can be written is imperfect in the sense of being subject to manipulation. The performance incentives faced by the agent are stronger in the “buy” regime. A positive (negative) impact – or ”externality” – of manipulation on true performance favors make (buy).}},
author = {{Andersson, Fredrik}},
issn = {{1935-1704}},
keywords = {{make-or-buy decision; manipulation; outsourcing}},
language = {{eng}},
number = {{1}},
publisher = {{Berkeley Electronic Press}},
series = {{Journal of Theoretical Economics}},
title = {{Make-or-Buy Decisions and the Manipulability of Performance Measures}},
url = {{http://dx.doi.org/10.2202/1935-1704.1790}},
doi = {{10.2202/1935-1704.1790}},
volume = {{11}},
year = {{2011}},
}