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Mathematical Problems in Engineering
Volume 2014 (2014), Article ID 835254, 8 pages
http://dx.doi.org/10.1155/2014/835254
Research Article

Research on Multiprincipals Selecting Effective Agency Mode in the Student Loan System

1College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 210016, China
2School of Economics, University of Jinan, Jinan 250022, China

Received 19 February 2014; Accepted 9 April 2014; Published 8 May 2014

Academic Editor: Ming Gao

Copyright © 2014 Libo Ding et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

An effective agency mode is the key to solve incentive problems in Chinese student loan system. Principal-agent frameworks are considered in which two principals share one common agent that is performing one single task but each prefers the different aspect of the task. Three models are built and decision mechanisms are given. The studies show that the three modes have different effects. Exclusive dealing mode is not good for long-term effect because sometimes it guides agent ignoring repayment. If effort proportionality coefficient and observability are both unchanged, principals all prefer common agency, but independent contracting mode may be more efficient in reality because not only the total outputs under that mode are larger than those under cooperation one, but also preferring independent contracting mode can stimulate the bank participating in the game.