Design of Optimal Incentive Payment Scheme for Enterprisers

An optimal incentive payment scheme was designed in order to prevent the problems of enterprisers adverse selection and moral hazard from occurring resulted from the absence of information on their real capability and their service cost and so forth. In this scheme, the revelation principle in the game theory is used to design different payment contracts to let enterprisers select, so a shareholder can judge their true information in terms of their selection. The analysis shows that the optimal payment scheme consists of compensation for their efforts, risk compensation and information rent, that the sensitivity of the optimal payment scheme is positively related to the expected compensation but negatively to the fixed compensation, and that efficient enterprisers work harder than inefficient ones and tend to choose high- powered incentives, lower fixed-price contracts and safer projects.