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We provide a general framework in which to determine the optimal penalty fee inducing the contractor to respect the contracted delivery date in public procurement contracts (PPCs). We do this by developing a real option model that enables us to investigate the contractor's value of investment...
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framework where punishment ("stick") and rewarding ("carrot") options are available, here we show analytically that the presence … of cooperators who don't punish in the population makes altruistic punishment evolutionarily weak. We show that … cooperation breaks down and strong reciprocity is maladaptive if costly punishment means "punishing defectors" and, even more so …
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Time overruns are common in public works and are not confined to inherently complex tasks. One explanation advanced in this paper is that bidders can undergo unpredictable changes in production costs which generate an option value of waiting. By exploiting the real-option approach, we examine...
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on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the … information needed to engage in crime arrives in the form of a rumor and that individuals update their beliefs about the … profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. We …
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