A study on the relationship between reputation effect and the optimal contract of library e-literature procurement

Abstract

This paper discusses the relationship between reputation and the optimal contract of library e-literature procurement. First, based on the principal-agent theory, a principal-agent model between a library and an e-literature provider is established. Second, we take hidden incentives of reputation as a constraint for the utility function of e-literature provider. With the study on the relationship between reputation effect and the optimal contract of library e-literature procurement, we find that reputation effect is a factor of the utility function of e-literature provider. This paper conludes that the labrary, in designing compensation contract of e-literature procurement, can use the reputation effect of e-literature provider to reduce their appropriate commission coefficients, and hence increase the expected utility of library.