This paper investigates a principal-agent model in which an owner (principal) optimizes a contract with a manager (agent) delegated to undertake an investment project. In the model, we explore the effects of costly exploration by which the manager learns the real value of development cost. We...

In many supply chains, the variance of orders may be considerably larger than that of sales, and this distortion tends to increase as one moves up a supply chain, this is known as "Bullwhip Effect". The Bullwhip phenomenon has recognized in many diverse markets. Procter & Gamble found that the...