ABSTRACT
The development and operation of infrastructure systems is a complex task that involves many stakeholders with conflicting interests. This is the case of a public-private partnership (PPP) where two stakeholders - the principal (e.g., government) and the agent (e.g., independent contractor) - make choices to fulfill their own objectives. The relationship becomes problematic because their interests are not aligned and the private agent could perform a poor quality work. This paper attempts to interpret the problem as a game where the principal and the agent (equipped with several decision rules) interact with each other and with the natural environment by exerting actions on the infrastructure system (e.g., inspections, maintenance works, shocks). We present an agent-based model capable of simulating various contract settings, players’ strategies and environmental conditions. The aim of the model is to find the contractual terms that should be selected by the principal in order to prevent the agent from shirking while maximizing the utility of both parties.
