Adverse Selection of Construction Project Manager Based on Principal-agent Theory

Discussed an optimal incentive contract to project managers in an adverse selection condition,and proposed an adverse selection model which could induce a project manager to show his/her actual ability.The results indicate that compared with symmetric information,the principal demands more efforts and pays more remuneration to the agent with high ability;optimal effort level of high ability managers would be the same in both cases;low ability managers' effort level would be lower than before.Additionally,in the condition of adverse selection,the manager with high ability would receive information rents.