Coordination of verification activities with incentives: a two-firm model
- PDF / 2,028,598 Bytes
- 17 Pages / 595.276 x 790.866 pts Page_size
- 43 Downloads / 248 Views
ORIGINAL PAPER
Coordination of verification activities with incentives: a two‑firm model Aditya U. Kulkarni1 · Christian Wernz2 · Alejandro Salado1 Received: 25 April 2019 / Revised: 7 October 2020 / Accepted: 26 October 2020 © The Author(s) 2020
Abstract In systems engineering, verification activities evaluate the extent to which a system under development satisfies its requirements. In large systems engineering projects, multiple firms are involved in the system development, and hence verification activities must be coordinated. Self-interest impedes the implementation of verification strategies that are beneficial for all firms while encouraging each firm to choose a verification strategy beneficial to itself. Incentives for verification activities can motivate a single firm to adopt verification strategies beneficial to all firms in the project, but these incentives must be offered judiciously to minimize unnecessary expenditures and prevent the abuse of goodwill. In this paper, we use game theory to model a contractor-subcontractor scenario, in which the subcontractor provides a component to the contractor, who further integrates it into their system. Our model uses belief distributions to capture each firm’s epistemic uncertainty in their component’s state prior to verification, and we use multiscale decision theory to model interdependencies between the contractor and subcontractor’s design. We propose an incentive mechanism that aligns the verification strategies of the two firms and using our game-theoretic model, we identify those scenarios where the contractor benefits from incentivizing the subcontractor’s verification activities. Keywords Systems engineering · Verification · Testing · Incentives · Multiscale decision theory
1 Introduction Verification activities aid in managing project risk while improving confidence in a system meeting its requirements (Salado 2015). They are critical to system development because they shape the uncertainty associated with the functioning or performance of the system that is being developed (Walden et al. 2015; Tahera et al. 2019). Most companies have not adopted a structured approach to verification (Shabi et al. 2017). As a result, verification activities consume a significant amount of resources during systems’ lifecycle throughout the industry (Tahera et al. 2017). Hence, the importance of discovering the scientific foundations of verification activities in systems engineering has been recognized by multiple authors, and research on developing robust * Alejandro Salado [email protected] 1
Grado Department of Industrial and Systems Engineering, Virginia Tech, Blacksburg, VA, USA
Department of Health Administration, Virginia Commonwealth University, Richmond, VA, USA
2
decision-making frameworks for verification activities is an active research area (Engel and Barad 2003; Shabi and Reich 2012; Salado and Kannan 2019; Xu and Salado 2019). Planning and executing verification activities becomes more difficult as the number of firms participating in system d
Data Loading...
