A control-theoretic view on incentives

doi:10.1016/0005-1098(82)90106-6

Automatica

Volume 18, Issue 2, March 1982, Pages 167-179

https://doi.org/10.1016/0005-1098(82)90106-6 Get rights and content

Abstract

The idea of declaring a reward (punishment) for a decision maker according to his particular choice of action in order to induce certain ‘desired’ behavior on the part of the decision maker is known as incentive (threat). This practice is age old. However, only in recent years have the notions been formalized. In the development of a control-theoretic view on incentives, we first investigate the deterministic version of the incentive problem. This reveals the basic simple idea behind the problem. It also illustrates the different possibilities introduced by the presence of dynamics and multi-follower nature of the problem. This is followed by two variants of the stochastic version of the problem where we concentrate on the role of uncertainties. Relationship to economic literature is also discussed.

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^☆: The original version of this paper was presented at the 4th International Conference on Analysis and Optimization of Systems which was held in Versailles, France during December 1980. This paper was recommended for publication in revised form by associate editor T. Başar.

¹: Present address: Electrical Engineering and Computer Science Department, University of Connecticut, Storrs, CT 06268, U.S.A.

²: Permanent address: Department of Applied Mathematics, Twente University of Technology, P.O. Box 217, 7500 AE Enschede, The Netherlands.

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A control-theoretic view on incentives☆

Abstract

J. Economic Theory

J. Public Economics

Closed-loop Stackelberg strategies with applications in the optimal control of multilevel systems

IEEE Trans Aut. Control

A new approach for derivation of closed-loop Stackelberg strategies

Hierarchical decision making under uncertainty

Equilibrium strategies in dynamics games with multi levels of hierarchy

The implementation of social choice rules: some general results on incentive compatibility

Rev. Economic Studies

Manipulation of voting schemes

Econometrica