{"title":"Personalised incentives with constrained regulator's budget","authors":"Lucas Javaudin, Andrea Araldo, André de Palma","doi":"arxiv-2311.14417","DOIUrl":null,"url":null,"abstract":"We consider a regulator driving individual choices towards increasing social\nwelfare by providing personal incentives. We formalise and solve this problem\nby maximising social welfare under a budget constraint. The personalised\nincentives depend on the alternatives available to each individual and on her\npreferences. A polynomial time approximation algorithm computes a policy within\nfew seconds. We analytically prove that it is boundedly close to the optimum.\nWe efficiently calculate the curve of social welfare achievable for each value\nof budget within a given range. This curve can be useful for the regulator to\ndecide the appropriate amount of budget to invest. We extend our formulation to\nenforcement, taxation and non-personalised-incentive policies. We analytically\nshow that our personalised-incentive policy is also optimal within this class\nof policies and construct close-to-optimal enforcement and proportional\ntax-subsidy policies. We then compare analytically and numerically our policy\nwith other state-of-the-art policies. Finally, we simulate a large-scale\napplication to mode choice to reduce CO2 emissions.","PeriodicalId":501487,"journal":{"name":"arXiv - QuantFin - Economics","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2023-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"arXiv - QuantFin - Economics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/arxiv-2311.14417","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
We consider a regulator driving individual choices towards increasing social
welfare by providing personal incentives. We formalise and solve this problem
by maximising social welfare under a budget constraint. The personalised
incentives depend on the alternatives available to each individual and on her
preferences. A polynomial time approximation algorithm computes a policy within
few seconds. We analytically prove that it is boundedly close to the optimum.
We efficiently calculate the curve of social welfare achievable for each value
of budget within a given range. This curve can be useful for the regulator to
decide the appropriate amount of budget to invest. We extend our formulation to
enforcement, taxation and non-personalised-incentive policies. We analytically
show that our personalised-incentive policy is also optimal within this class
of policies and construct close-to-optimal enforcement and proportional
tax-subsidy policies. We then compare analytically and numerically our policy
with other state-of-the-art policies. Finally, we simulate a large-scale
application to mode choice to reduce CO2 emissions.