An Analysis of Principal-Agent Relationship Under the Engineering Supervision Institution

The author establishes a principal-agent model which takes the scale of owner's investment, the qualities of engineering supervision, the effects of exogenous random variables and some other factors into consideration. Then the author analyzes the influence of all the factors above on incentive intensity coefficient, and conducts an extensive research on the principal-agent relationship between the owner and the engineering supervision. At last, the author puts forward some key factors which must be considered in designing an incentive mechanism of engineering supervision.