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Essay text:
Warranty clauses, which are designed by the agent to be a signal of commitment, end up becoming an area for moral hazard.
We discuss why government clients become risk averse as a starting basis for understanding Technology One’s preferred contractual arrangements. It is suggested that an incentive-based contract would be more likely to produce an innovative solution for the principal and would more closely align the motivations of the two parties. Alternatively, the use of a performance surety bond may alleviate the risk for the vendor, but only serves to increase the average bid price for the principal...
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Common topics in this essay:
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