Towards understanding the role of adverse selection and moral hazard in automated negotiation of service level agreements

  • Authors:
  • Donato Barbagallo;Marco Comuzzi

  • Affiliations:
  • Politecnico di Milano, Milano, Italy;Politecnico di Milano, Milano, Italy

  • Venue:
  • Proceedings of the 3rd international workshop on Services integration in pervasive environments
  • Year:
  • 2008

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Abstract

Service Level Agreements (SLAs) are increasing their importance in the context of process integration across organizations. Literature on SLA and, generally, contracts, draws mainly from microeconomic theory and system engineering aspects, such as automated negotiation of QoS. We underline the need for integrating the microeconomic theoretical basis and the engineering approach to contract management. Specifically, we focus on mechanisms to reduce adverse selection and moral hazard risks in automated contract lifecycle. Our SLA-oriented framework, in particular, introduces penalties and the temporal approach to SLA management as preliminary mechanisms to reduce such risks in principal-agents relationships.