Study on Incentives on the Construction Contractor Considering the Reputation Effect

By applying principle-agent and reputation theory, combining with the multi-task principle-agent model and agent market reputation model, construction contractor incentive model of construction project considering the reputation effect was established, and the validity of the market reputation incentive to the contractor was analyzed. We obtained: Firstly, reputation incentive can partly substitute explicit incentives; the "market reputation" of the contractor can make the contractors\´ opportunism behavior less and lower the client\´s incentive cost even without the "Game reputation" which is formed by the repetitious game between the client/project management company and the contractor. Secondly, the explicit incentives and the implicit incentives are complementary each other; when the reputation incentive is stronger, the explicit incentives can be weaker. Thirdly, the validity and maneuverability of reputation incentive depends on the establishment of construction market credit system and the just evaluation of the contractor\´s working ability and effort.