Chen Y.-HKung L.-CYu J.-YTsai H.-JJIUN-YU YUYU-HUNG CHENLING-CHIEH KUNG2021-08-312021-08-31202101605682https://www.scopus.com/inward/record.uri?eid=2-s2.0-85105890941&doi=10.1080%2f01605682.2021.1907240&partnerID=40&md5=6b17ed385b1ae7ad78f91a46e3fe8994https://scholars.lib.ntu.edu.tw/handle/123456789/579952This paper examines the contracting problem between a medical equipment vendor and a hospital in the healthcare industry. Many medical treatments depend heavily on the reliability of newly developed equipment, which typically encompasses private information on the part of the vendor. We built a game-theoretic model to examine the optimal contract a vendor can offer to prevent hospitals from underpaying for a reliable machine. First, the contract format including revenue sharing may serve as a signaling device of reliability. Second, the management model of a hospital has a strong impact on contract design. In particular, the vendor is better able to signal its reliability through revenue sharing to a non-profit hospital than to a for-profit hospital. Lastly, revenue sharing becomes more attractive to vendors as hospitals are more concerned about social welfare. ? Operational Research Society 2021.Game theory; Hospitals; Profitability; Reliability; Equipment reliability; Game-theoretic model; Healthcare industry; Management Model; Medical treatment; Optimal contract; Private information; Signaling devices; Signaling equipmentjournal article10.1080/01605682.2021.19072402-s2.0-85105890941