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Robustness of incentive policies in team problems with discrepancies in goal perceptions. (English) Zbl 0545.90108

Dynamic modelling and control of national economies 1983, Proc. 4th IFAC/IFORS/IIASA Conf., Washington/USA 1983, IFAC Proc. Ser. 7, 281-288 (1984).
Summary: [For the entire collection see Zbl 0539.00026.]
In this paper we analyze a class of two-agent team decision problems with a hierarchical decision structure, wherein one of the decision makers may have a slightly different perception of the overall team goal, with this slight variation not known by the other agent who is assumed to occupy the hierarchically dominant position. The leading agent has access to dynamic information and his role is to announce such a policy (incentive scheme) which would lead to achievement of the overall team goal, in spite of the slight variations in the other agent’s perception of that goal, which are not known or predictable by him. We may call a policy with such an additional feature a robust incentive policy. We obtain, in the paper, robust policies for the leading agent, for a general cost functional with convex structure, which are least sensitive to variations in the following agent’s perception of the team goal. In some special cases, we show that the robust feature of the incentive scheme is maintained regardless of the magnitude and nature of the variations, and illustrate the theory with two applications examples arising in microeconomics and armament limitation and control.

MSC:

91A35 Decision theory for games
93A13 Hierarchical systems
90B50 Management decision making, including multiple objectives
91B10 Group preferences
91B06 Decision theory

Citations:

Zbl 0539.00026