To ensure virtual enterprise ( VE) reaches the desired goals，the owner should design effective mechanisms to avoid moral
hazard． In view of the VE exists principal agent relationship between the owner and the partner，we incorporate the partner’s fairness
preferences psychology and design an effective incentive mechanism considering the partner’s fairness concern to prevent the moral
hazard problem，and compared to the traditional principal agent model． Analysis results show that the fairness preference has changed
some of the conclusions of the traditional principal agent model that influences the effort level and the revenue sharing． The owner
should try to choose the partners with lower intensity fairness preferences psychology to avoid moral hazard in order to increase its own
profit．