Managing asymmetric information effects in decision making: task complexity-based model
by Belkacem Athamena; Zina Houhamdi; Ghaleb A. El Refae
International Journal of Quality Engineering and Technology (IJQET), Vol. 8, No. 1, 2020

Abstract: This paper proposes a formal model to manage the impact of asymmetric information in decision-making by using principal-agent problems in which an agent (who has incomplete information) must decide to perform or not perform a task on behalf of the principal. After performing a complex (simple) task, the agent underrates (overrates) his competence. As a consequence of underestimation, a competent agent may decide to stop performing the task henceforth. The agent infers his competence from his productivity on a performed task. However, the productivity depends on both the agent's competence and the task complexity. To avoid this situation, the company appoints a mentor (fully informed superior agent) who can determine the task complexity and assess the agent's competence. Accordingly, the mentor matches the task complexity perfectly with the agent's competence. In cases where the mentor and the junior have different preferences, the mentor may not confess all information to the agent. Nevertheless, the mentor desires the agent to fulfill the task. This paper proposes a solution for all of these situations by using a mathematical model. The model assesses the agent's competence based on his productivity and the mentor's appraisal and assists the agent in making the right decision.

Online publication date: Wed, 14-Oct-2020

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Quality Engineering and Technology (IJQET):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com