Expectation of contract incentives

John A. Finchum

Naval Research Logistics Quarterly, 1972, vol. 19, issue 2, 389-397

Abstract: The application of statistical expectation to risk density functions and fee/incentive‐element relationships is shown to be useful in structuring contract incentives. A mathematical procedure for calculating the expected value of fee for a given risk/incentive arrangement is described along with cost examples and related sensitivity analyses. The structuring of equivalent incentives is demonstrated by the use of the contracting procedure used for procuring the C‐5A aircraft.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:19:y:1972:i:2:p:389-397

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