Make-or-buy decisions and the manipulability of performance measures
(2009)- Abstract
- 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:
https://lup.lub.lu.se/record/1768192
- author
- Andersson, Fredrik LU
- organization
- publishing date
- 2009
- type
- Working paper/Preprint
- publication status
- published
- subject
- keywords
- make-or-buy decision, manipulation, outsourcing
- pages
- 38 pages
- publisher
- Department of Economics, Lund University
- 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
- 2016-04-04 11:41:49
- date last changed
- 2021-03-22 14:05:45
@misc{b9bfdf6c-3701-4b1b-a903-eede04df8e91, abstract = {{Abstract in Undetermined<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}}, keywords = {{make-or-buy decision; manipulation; outsourcing}}, language = {{eng}}, note = {{Working Paper}}, publisher = {{Department of Economics, Lund University}}, title = {{Make-or-buy decisions and the manipulability of performance measures}}, url = {{https://lup.lub.lu.se/search/files/5833897/1774329}}, year = {{2009}}, }