Contract on Customer Knowledge Collaborative Acquisition for Manufacturer and Retailer with Double-Sided Moral Hazard

Abstract

In the process of customer knowledge collaborative acquisition information asymmetry between manufacturer and retailer leads to double-sided hazard problem that result in the decrease of their collaborative efficiency and customer knowledge acquisition performance. Therefore, we focus on contractual arrangements to solve this problem. First, based on double-sided moral hazard effects of different efforts and their coefficients of elasticity were considered to construct customer knowledge performance function. Then, cooperation contract was designed through building mathematic model with principleagent theory. The results showed that the optimal revenue sharing rate of customer knowledge collaborative acquisition was not relative with the efforts of manufacturer and retailer and their cost-of-effort coefficient, while relative with effortelasticity and exponents of cost-of-effort functions. The results also explored that when manufacturer's efforts contributed more for customer knowledge acquisition, she will share more revenue to give itself incentive; when retailer's efforts contributed more, manufacturer will let him share more revenue for incentive; this incentive mechanism decreased the double-sided moral hazard. Finally, a numerical example illuminated further the contract design and relationships between its variables.