Even big corporates are adopting agile methodologies, and combined with an appropriate contract, they provide a game theoretic incentive for both parties to act

Even big corporates are adopting agile methodologies, and combined with an appropriate contract, they provide a game theoretic incentive for both parties to act how the other intended. How the system is supposed to work: Contractor does a small increment of work, delivers it, and gets paid by client based on the time they put in. Exceptions: 1. Contractor doesn't deliver anything, or the quality is so bad that bad faith is assumed. Response: Contractor gets paid for claimed work on increment (which is limited by how much the contractor is authorised to do). Contractor doesn't get any further work. The contractor doesn't want this since they lose the income from future iterations. 2. Contractor does work, but client refuses to pay. Response: Client doesn't do any more work for the contractor. Contractor's loss is limited because the iteration is short. The client doesn't want this because they lose the benefits of the contract on the next iteration. 3. Contractor does work, but it doesn't fully meet the quality / scope requirements of the client, but the client can see progress is being made. Client pays the contractor, and the contractor and client work together to ensure that the next iteration moves in the direction the client wants.