Abstract
We study a “principal-agent” setting in which a principal motivates a team of agents to participate in her project (e.g., friends in a social event or store owners in a shopping mall). A key element in our model is the externalities among the agents; i.e., the benefits that the agents gain from each others’ participation. Bernstein and Winter [6] devised a basic model for this setting and characterized the optimal incentive mechanism inducing full participation as a unique Nash equilibrium. Here we suggest and embark on several generalizations and extensions to the basic model, which are grounded in real-life scenarios. First, we study the effect of side payments among the agents on the structure of the optimal mechanism and the principal’s utility. Second, we study the optimal partition problem in settings where the principal operates multiple parallel projects.
This work was partially supported by the Israel Science Foundation (grant number 1219/09) and by the Leon Recanati Fund of the Jerusalem school of business administration.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Arora, S., Karger, D., Karpinski, M.: Polynomial Time Approximation Schemes for Dense Instances of NP-Hard Problems. Journal of Computer and System Sciences 58(1), 193–210 (1999)
Aumann, R.: Acceptable Points in General Cooperative n-Person Games. In: Contributions to the Theory of Games, vol. 4 (1959)
Babaioff, M., Feldman, M., Nisan, N.: Combinatorial Agency. In: ACM Electronic Commerce (2006)
Babaioff, M., Feldman, M., Nisan, N.: Mixed Strategies in Combinatorial Agency. In: 2nd international Workshop on Internet and Network Economics (2006)
Fernandez de la Vega, W.: Max-Cut Has a Randomized Approximation Scheme in Dense Graphs. Random Struct. Algorithms 8(3), 187–198 (1996)
Winter, E., Bernstein, S.: How to Throw a Party: Multi-Agent Initiatives with Type Dependent Externalities. Center for the study of rationality: discussion paper (2008)
Jehiel, P., Moldovanu, B.: Strategic Nonparticipation. RAND Journal of Economics 27, 84–98 (1996)
Frieze Alan, M., Mark, J.: Improved Approximation Algorithms for Max k-Cut and Max Bisection. In: Proceedings of the 4th International IPCO Conference on Integer Programming and Combinatorial Optimization, pp. 1–13. Springer, London (1995)
Segal, I.: Contracting with Externalities. Quarterly Journal of Economics 114, 337–388 (1999)
Segal, I.: Coordination and Discrimination in Contracting with Externalities: Divide and Conquer? Journal of Economic Theory 113, 337–388 (2004)
Viggo, K., Sanjeev, K., Jens, L., Alessandro, P.: On the Hardness of Approximating Max k-Cut and its Dual. Technical report (1997)
Winter, E.: Incentives and Discrimination. American Economic Review 94, 764–773 (2004)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2009 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Feldman, M., Tessler, R., Wilf, Y. (2009). Optimal Incentives for Participation with Type-Dependent Externalities. In: Leonardi, S. (eds) Internet and Network Economics. WINE 2009. Lecture Notes in Computer Science, vol 5929. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-10841-9_32
Download citation
DOI: https://doi.org/10.1007/978-3-642-10841-9_32
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-10840-2
Online ISBN: 978-3-642-10841-9
eBook Packages: Computer ScienceComputer Science (R0)