Breaking the winner's curse in outsourcing

Bin Jiang, Srinivas Talluri, Tao Yao, Yongma Moon

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This research utilizes real options theory to investigate how to break the winner's curse in contracting through effective contracting mechanisms. We focus on two contracting approaches: flexible price contract and gain-sharing contract. For reasons of analytical tractability, we first utilize the geometric Brownian motion as the dynamic model to obtain closed-form solutions to break the outsourcing winner's curse. Subsequently, we extend our model to the mean-reverting process and provide numerical examples to verify the validity of our closed-form results, which have not previously been presented in the outsourcing literature. Finally, we provide prescriptions for the problem of the winner's curse in outsourcing.

Original languageEnglish (US)
Pages (from-to)573-594
Number of pages22
JournalDecision Sciences
Volume41
Issue number3
DOIs
StatePublished - Aug 1 2010

Fingerprint

Outsourcing
Brownian movement
Dynamic models
Contracting
Winner's curse

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Information Systems and Management
  • Management of Technology and Innovation

Cite this

Jiang, B., Talluri, S., Yao, T., & Moon, Y. (2010). Breaking the winner's curse in outsourcing. Decision Sciences, 41(3), 573-594. https://doi.org/10.1111/j.1540-5915.2010.00281.x
Jiang, Bin ; Talluri, Srinivas ; Yao, Tao ; Moon, Yongma. / Breaking the winner's curse in outsourcing. In: Decision Sciences. 2010 ; Vol. 41, No. 3. pp. 573-594.
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Jiang, B, Talluri, S, Yao, T & Moon, Y 2010, 'Breaking the winner's curse in outsourcing', Decision Sciences, vol. 41, no. 3, pp. 573-594. https://doi.org/10.1111/j.1540-5915.2010.00281.x

Breaking the winner's curse in outsourcing. / Jiang, Bin; Talluri, Srinivas; Yao, Tao; Moon, Yongma.

In: Decision Sciences, Vol. 41, No. 3, 01.08.2010, p. 573-594.

Research output: Contribution to journalArticle

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