Information Technology Outsourcing Incentive Research of Bilateral Moral Hazard of Output Elasticity

Wei XU


The study constructs general motivation model of technology outsourcing of bilateral moral hazard and mainly analyzes impact that principal and agent’s output elasticity influence on sharing ratio and variable profit. The main conclusions are as following: Firstly, sharing ratio is determined by output elasticity, the side that owns bigger output elasticity will have higher sharing proportion from the output, especially when their output elasticity equal, sharing ratio is 0.5; secondly, respective variable profit also depends on output elasticity, the side that owns bigger output elasticity will have more variable profit.


Bilateral moral hazard; Output elastic; IT outsourcing; Incentive

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