The issue of corner cutting has vital implications for the safety of complex engineered systems because shortcuts can lead to unacceptable (and unknown) technical failure risks. In addition, corner cutting is often illicit. Therefore, the system's managers are not necessarily aware of it and may be basing their decisions on wrong assumptions about operators' or technicians' actions. Illicit shortcuts occur for a variety of reasons, among them unrealistic deadlines and resource constraints, bad incentive structures, divergence of risk attitudes, ignorance of the system, myopic views, and wrong learning from past decisions and outcomes.

This paper addresses the issue of corner cutting in the development, management, or operations phases of a complex engineered system. The purpose of this model is to provide decision support to managers in situations where an agent/operator may be tempted to take shortcuts. The principal-agent format is used to model the situation, the “corner-cutter” being the agent, and the supervisor the principal.

In this paper, we analyze the interaction between the decisions of the principal and the agent using these two equations in an interactive mode. One of the key features of the model is the use of probabilistic risk analysis to determine the effect of the agent's action (and shortcuts) on the performance of the corresponding component or subsystem, and therefore on reliability of the whole system. The overall model then allows us to quantify the effects of two key decisions of the principal (constraints and incentives) on the actions of the agent, and consequently, on the performance of the system. This model can thus support the managers' decisions based on anticipating their consequences on the system's performance instead of simply setting rules without considering their effects.