Application of the agency theory for the analysis of performance-based mechanisms in road management

Sánchez Soliño, Antonio (2013). Application of the agency theory for the analysis of performance-based mechanisms in road management. In: "13th World Conference on Transportation Research (WCTR)", 15/07/2013 - 18/07/2013, Río de Janeiro (Brasil). pp. 1-13.

Description

Title: Application of the agency theory for the analysis of performance-based mechanisms in road management
Author/s:
  • Sánchez Soliño, Antonio
Item Type: Presentation at Congress or Conference (Article)
Event Title: 13th World Conference on Transportation Research (WCTR)
Event Dates: 15/07/2013 - 18/07/2013
Event Location: Río de Janeiro (Brasil)
Title of Book: Proceedings of the 13th World Conference on Transport Research (WCTR), July 15-18, 2013 Rio de Janeiro, Brazil
Date: July 2013
Subjects:
Faculty: E.T.S.I. Caminos, Canales y Puertos (UPM)
Department: Ingeniería Civil: Construcción
Creative Commons Licenses: Recognition - No derivative works - Non commercial

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Abstract

El WCTR es un congreso de reconocido prestigio internacional en el ámbito de la investigación del transporte, y aunque las actas publicadas están en formato digital y sin ISSN ni ISBN, lo consideramos lo suficientemente importante como para que se considere en los indicadores. This paper develops a model based on agency theory to analyze road management systems (under the different contract forms available today) that employ a mechanism of performance indicators to establish the payment of the agent. The base assumption is that of asymmetric information between the principal (Public Authorities) and the agent (contractor) and the risk aversion of this latter. It is assumed that the principal may only measure the agent?s performance indirectly and by means of certain performance indicators that may be verified by the authorities. In this model there is presumed to be a relation between the efforts made by the agent and the performance level measured by the corresponding indicators, though it is also considered that there may be dispersion between both variables that gives rise to a certain degree of randomness in the contract. An analysis of the optimal contract has been made on the basis of this model and in accordance with a series of parameters that characterize the economic environment and the particular conditions of road infrastructure. As a result of the analysis made, it is considered that an optimal contract should generally combine a fixed component and a payment in accordance with the performance level obtained. The higher the risk aversion of the agent and the greater the marginal cost of public funds, the lower the impact of this performance-based payment. By way of conclusion, the system of performance indicators should be as broad as possible but should not overweight those indicators that encompass greater randomness in their results.

More information

Item ID: 29737
DC Identifier: http://oa.upm.es/29737/
OAI Identifier: oai:oa.upm.es:29737
Official URL: http://www2.wctr2013rio.com/
Deposited by: Memoria Investigacion
Deposited on: 13 Jun 2014 12:48
Last Modified: 17 Apr 2018 15:31
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