Analysis of moral hazard in virtual enterprise based on probability constraints

In this paper, the moral hazard in Virtual Enterprise (VE) is studied based on the principal-agent theory with probability constraints. The probability is used to quantify the partners´ risk attitude in VE, and the principal-agent model under probability constraint is used to deal with the problem. Firstly, the probability constraints is used to modify the participation constraints of the traditional principal-agent model, then the model is solved and the optimality decision is analysed, which shows the usefulness and effectiveness of the model.