Adverse Selection and Moral Hazard in Logistics Transaction

According to new institutional economics, Logistics transaction is a problem of Principal-agent that traditional organization transfers its internal logistics activities to the professional outsider which is borne the logistics agent's liability. The paper employs the theory of principal-agent, signaling game model and incentive model to analyze the forms and the problems about adverse selection and moral hazard in logistics transaction, to solve the fundamental issues caused by incomplete and asymmetrical information. The paper presents that information asymmetry, 'Short sighted', huge market and the limitation of signal dissemination system will result in adverse selection in logistics transaction. Adverse selection will result the excellent logistics supplier to be crowded out of the market gradually, result the condition of logistics supply insufficient and Supply surplus existing in the same market, impede the improvement of logistics productivity, and moral hazard in logistics market will result insufficient effective demand. The paper implies that signal transferring and signal screening are the most common methods to resolve the above problem, The paper sets up a signaling game model and an incentive model, draws a conclusion that by designing appropriate signaling game model and incentive mechanism, we can change sonic asymmetrical and incomplete information into symmetrical and complete one to help improve the efficient of logistics transaction.