Design of incentive mechanism and game analysis for project managers

Through mathematical models and game theory, this paper analyzes the optimal incentive contracts between enterprises and their project managers under asymmetric information condition in order to solve the problems in establishing incentive mechanism for project managers. Punishment mechanism is introduced and analyzed in the design of incentive mechanism for project managers. It expands the theoretical frame for incentive mechanism. The results are as follows: Punishment mechanism is related and complementary with incentive mechanism. Both can encourage or guide the project managers to work hard towards common goals. Therefore, the function of the incentive mechanism and the punishment mechanism should be considered simultaneously in the design of incentive contracts for project managers. It helps to prevent project managers from speculating. Introduction of punishment mechanism into incentive mechanism not only results in theoretical innovation, but also has great application value in practice.