Using Cost Observation to Regulate Firms
研究在供应商对项目成本有信息优势并投资于成本削减时，如何利用会计数据设计监管或采购合同，发现最优合同是线性成本超支激励合同，且随报价降低趋近固定价格合同。
The paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier (1) has superior information about the cost of the project and (2) invests in cost reduction. The main result states that, under risk neutrality, the supplier announces an expected cost and is given an incentive contract linear in cost overruns. This (optimal) contract moves toward a fixed-price contract as the announced cost decreases. An investment choice is then introduced and the use of a rate-of-return regulation is studied.