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Make-or-buy decisions and the manipulability of performance measures

Andersson, Fredrik LU (2009)
Abstract (Swedish)
Abstract in Undetermined

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:
author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
make-or-buy decision, manipulation, outsourcing
pages
38 pages
publisher
Department of Economics, Lund Universtiy
language
English
LU publication?
yes
id
b9bfdf6c-3701-4b1b-a903-eede04df8e91 (old id 1768192)
alternative location
http://www.nek.lu.se/publications/workpap/Papers/WP09_16.pdf
date added to LUP
2011-01-27 15:35:04
date last changed
2016-09-14 11:30:56
@misc{b9bfdf6c-3701-4b1b-a903-eede04df8e91,
  abstract     = {<b>Abstract in Undetermined</b><br/><br>
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},
  keyword      = {make-or-buy decision,manipulation,outsourcing},
  language     = {eng},
  pages        = {38},
  publisher    = {ARRAY(0x90da598)},
  title        = {Make-or-buy decisions and the manipulability of performance measures},
  year         = {2009},
}