Aligning incentives Flashcards
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1
Q
General
A
Cisco
Suppliers piled up inventory
Companies act in own interest
SC works well if companies’ incentives are aligned
Make pie bigger, otherwise lose from other SCs
2
Q
Hidden action
A
Whirlpool & retailer
Actions are hidden
So hard to create incentives
3
Q
Hidden information
A
one company has information that others don’t have
auto suppliers & manufacturers
unwillingness to share information bc other party can make use of it
4
Q
Badly designed incentives
A
Canadian bread maker & deliveryman
5
Q
Tackle by
A
Acknowledging problem
Diagnosing cause
redesign incentives
6
Q
Redesign by
A
Changing contracts
Gathering/sharing information that was previously hidden
develop trust with partners
7
Q
Prevent by
A
incentive audits
Educating managers
make discussions less personal
