Analysis Of The Military Representative Incentive Mechanism Based On Moral Hazard Model

With the development of economy and transformation of the new military revolution,the problem that the current military representative system that adapts the traditionalplanned economical system exist problem that the military representative performanceappraisal is not perfect; the management system is not scientific, work backward, humanresources wasted and so on. This thesis makes research on the phenomenon of militaryrepresentative system in our county by using the incentive theories. It is rich and perfectsthe theory of defense acquisition, and can greatly improve the enthusiasm and initiative ofthe military representative.Firstly, the general situation of our country’s military representative system isintroduced, and the existing problems are analyzed. Secondly, the relationship betweenmilitary and military representative is a principal-agent, has inconsistent objectives andinformation asymmetry; quality is the life of weapon equipment, is the militaryrepresentative nature of existence, so let the quality of military product as the outputvariable and let the quality of military product and production schedule as the observableset, establishing the moral hazard model of military representative; divides two cases tothe level of effort observable and unobservable. The conclusion is that: when the level ofeffort can be observed, the military is not necessary to pay more for the militaryrepresentative; when the level of effort is unobservable, the share of the militaryrepresentative is a decreasing function of the coefficient of effort cost and measure ofabsolute risk aversion; if the production schedule is related to the quality of militaryproduct, and includes into the incentive contract, it can improve the incentive effect,reduce the risk cost and improve working enthusiasm of the military representative.Finally, based on the analysis and actual military representative, put forward the idea ofmilitary representative incentive mechanism design.