On the Value of Penalties in Time-Inconsistent Planning

DOI10.4230/LIPICS.ICALP.2017.10zbMATH Open1441.91013arXiv1702.01677OpenAlexW2594830350MaRDI QIDQ5111339FDOQ5111339

Authors: Susanne Albers, Dennis Kraft 

Publication date: 27 May 2020

Abstract: People tend to behave inconsistently over time due to an inherent present bias. As this may impair performance, social and economic settings need to be adapted accordingly. Common tools to reduce the impact of time-inconsistent behavior are penalties and prohibition. Such tools are called commitment devices. In recent work Kleinberg and Oren connect the design of prohibition-based commitment devices to a combinatorial problem in which edges are removed from a task graph $G$ with $n$ nodes. However, this problem is NP-hard to approximate within a ratio less than $sqrtn/3$. To address this issue, we propose a penalty-based commitment device that does not delete edges but raises their cost. The benefits of our approach are twofold. On the conceptual side, we show that penalties are up to $$ times more efficient than prohibition, where $$ parameterizes the present bias. On the computational side, we significantly improve approximability by presenting a $2$-approximation algorithm for allocating the penalties. To complement this result, we prove that optimal penalties are NP-hard to approximate within a ratio of $1.08192$.

Full work available at URL: https://arxiv.org/abs/1702.01677

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zbMATH Keywords

computational complexityapproximation algorithmstime-inconsistent preferencesbehavioral economicscommitment devices

Mathematics Subject Classification ID

Computational difficulty of problems (lower bounds, completeness, difficulty of approximation, etc.) (68Q17) Approximation algorithms (68W25) Games involving graphs (91A43)

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• Combinatorial auctions with endowment effect
• The price of uncertainty in present-biased planning
• Motivating time-inconsistent agents: a computational approach
• Alleviating time inconsistent behaviors via a competition scheme
• Present-biased optimization

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