Design Capability Identify under Asymmetric Information

Yi-Yong Lin, You-Song Wang

(School of Civil Engineering and Transportation, South China University of Technology,Guangzhou 510641,China)



Abstract:

Under the condition of asymmetric information, the Spence’s Job Market Signaling Model is generally applied to inspect the design capability of a designer and his labor and efforts to be invested; however, since the “prior probability” and “posterior probability” have great uncertainties, the practical effect of this model is poor. On the basis of analyzing reverse selection questions, this paper provides a design capability screening model, which can make a designer automatically expose his hidden information so that necessary actions can be taken as required by the owner to realize risk sharing. A calculation example is finally given to demonstrate that the new model is helpful for an owner to select a designer with high professional level and to lead the designer to work hard, so it is of significant application value.

Key words:  Spence’s Job Market Signaling Model  reverse selection  design capability  risk analysis  asymmetric information

DOI：10.11916/j.issn.1005-9113.2013.06.002

Clc Number:TU9

Fund: