@article{publications16866,
          volume = {vol. 87},
           month = {September},
          author = {Daniel F. Garrett},
           title = {Robustness of simple menus of contracts in cost-based procurement},
       publisher = {Elsevier},
         journal = {Games and Economic Behavior},
           pages = {631--641},
            year = {2014},
        keywords = {Cost-based procurement, Simple mechanisms, Minimax},
             url = {https://publications.ut-capitole.fr/id/eprint/16866/},
        abstract = {We consider a model of cost-based procurement in which the principal faces Knightian uncertainty about the agent's preferences for cost reduction. We show that a particularly simple incentive scheme{--}a menu comprising a fixed-price contract and a cost-reimbursement contract{--}minimizes the maximum expected payment, where this maximum is taken over the set of possible agent preferences. For some parameters of the problem, a range of alternative incentive schemes also satisfy this criterion. We show that the simple incentive scheme is not weakly dominated by any of the alternatives: there does not exist an alternative mechanism for which the expected payment is no higher for all realizations of the agent's preferences and strictly lower for some realization.}
}