Modelling principal-agent dilemma for management of resilience in interdependent infrastructure systems

Ali Izaddoost, Nader Naderpajouh and Gholamreza Heravi

Reliability Engineering and System Safety, 2023, vol. 238, issue C

Abstract: Temporal dilemmas are observed between the short-term incentives of the asset managers, as agents, versus the long-term resilience driven goals of the organisations, who own and operate the infrastructure systems as principals. That is, the incentive mechanisms designed based on the short-term tenure of an asset manager may structurally deprive the infrastructure owner/operator organisations from directing resources towards their long-term resilience driven goals. Lack of long-term incentives by asset managers adds another layer to managment of resilience in the context of infrastructure systems in their life cycle. We proposed a framework for integrating resilience into asset management of infrastructure systems and modelled it to explore the impact of such temporal dilemmas in principal-agent relations and potential strategic responses. The model reflects the interdependency of the sub-systems of infrastructures to assess each sub-system's periodic coupled resilience. The proposed integrated simulation reflects coupled impacts of shocks and stressors within regular asset management regimes. The simulation results provide quantitative evidence of how managerial and political dimensions can impact management of resilience in the context of infrastructure systems and open another discourse towards considering the complexities of organising for resilience in socio-technical systems.

Keywords: Asset management; Interdependent infrastructure systems; Incentive mechanism; Agency theory; Climate change; Resilience (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reensy:v:238:y:2023:i:c:s0951832023003381

DOI: 10.1016/j.ress.2023.109424

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