A Perspective on Incentive Design: Challenges and Opportunities

Abstract

The increasingly tight coupling between humans and system operations in domains ranging from intelligent infrastructure to e-commerce has led to a challenging new class of problems founded on a well-established area of research: incentive design. There is a clear need for a new tool kit for designing mechanisms that help coordinate self-interested parties while avoiding unexpected outcomes in the face of information asymmetries, exogenous uncertainties from dynamic environments, and resource constraints. This article provides a perspective on the current state of the art in incentive design from three core communities—economics, control theory, and machine learning—and highlights interesting avenues for future research at the interface of these domains.