Agent-Designed Contracts: How to Sell Hidden Actions (2402.16547v1)
Abstract: We study the problem faced by a service provider that has to sell services to a user. In our model the service provider proposes various payment options (a menu) to the user which may be based, for example, on the quality of the service. Then, the user chooses one of these options and pays an amount to the service provider, contingent on the observed final outcome. Users are not able to observe directly the action performed by the service provide to reach the final outcome. This might incentivize misconduct. Therefore, we propose a model that enforces trust through economics incentives. The problem has two crucial features: i) the service provider is responsible for both formulating the contract and performing the action for which the user issues payments, and ii) the user is unaware of the true action carried out by the service provider, which is hidden. We study this delegation problem through the lens of contract design, with the overarching goal of enabling the computation of contracts that guarantee that the user can trust the service provider, even if their action is hidden.
- Contracts with private cost per unit-of-effort. In Proceedings of the 22nd ACM Conference on Economics and Computation. 52–69.
- Delegating Data Collection in Decentralized Machine Learning. arXiv preprint arXiv:2309.01837 (2023).
- Combinatorial agency. In Proceedings of the 7th ACM Conference on Electronic Commerce. 18–28.
- Combinatorial agency. Journal of Economic Theory 147, 3 (2012), 999–1034.
- Moshe Babaioff and Eyal Winter. 2014. Contract complexity. EC 14 (2014), 911.
- Regret-minimizing Bayesian persuasion. Games and Economic Behavior 136 (2022), 226–248.
- Gabriel Carroll. 2015. Robustness and linear contracts. American Economic Review 105, 2 (2015), 536–563.
- Gabriel Carroll. 2019. Robustness in mechanism design and contracting. Annual Review of Economics 11 (2019), 139–166.
- Bayesian agency: Linear versus tractable contracts. Artificial Intelligence 307 (2022), 103684.
- Designing menus of contracts efficiently: The power of randomization. Artificial Intelligence 318 (2023), 103881.
- Multi-Agent Contract Design: How to Commission Multiple Agents with Individual Outcomes. In Proceedings of the 24th ACM Conference on Economics and Computation (EC ’23). Association for Computing Machinery, New York, NY, USA, 412–448.
- Selling data to a machine learner: Pricing via costly signaling. In International Conference on Machine Learning. PMLR, 3336–3359.
- On Supermodular Contracts and Dense Subgraphs. In Proceedings of the 2024 Annual ACM-SIAM Symposium on Discrete Algorithms (SODA). SIAM, 109–132.
- Combinatorial contracts. In 2021 IEEE 62nd Annual Symposium on Foundations of Computer Science (FOCS). IEEE, 815–826.
- Multi-agent contracts. In Proceedings of the 55th Annual ACM Symposium on Theory of Computing. 1311–1324.
- Combinatorial Contracts Beyond Gross Substitutes. In Proceedings of the 2024 Annual ACM-SIAM Symposium on Discrete Algorithms (SODA). SIAM, 92–108.
- Simple versus optimal contracts. In Proceedings of the 2019 ACM Conference on Economics and Computation. 369–387.
- The complexity of contracts. SIAM J. Comput. 50, 1 (2021), 211–254.
- Rationality-robust information design: Bayesian persuasion under quantal response. In Proceedings of the 2024 Annual ACM-SIAM Symposium on Discrete Algorithms (SODA). SIAM, 501–546.
- Optimal Coordination in Generalized Principal-Agent Problems: A Revisit and Extensions. arXiv:2209.01146 [cs.GT]
- Robust Stackelberg Equilibria. arXiv preprint arXiv:2304.14990 (2023).
- Sanford J Grossman and Oliver D Hart. 1992. An analysis of the principal-agent problem. In Foundations of Insurance Economics: Readings in Economics and Finance. Springer, 302–340.
- Contracts under moral hazard and adverse selection. In Proceedings of the 22nd ACM Conference on Economics and Computation. 563–582.
- Johan Håstad. 1999. Clique is hard to approximate within n1−ϵsuperscript𝑛1italic-ϵn^{1-\epsilon}italic_n start_POSTSUPERSCRIPT 1 - italic_ϵ end_POSTSUPERSCRIPT. Acta Mathematica 182, 1 (1999), 105–142.
- Bengt Holmström. 1979. Moral hazard and observability. The Bell journal of economics (1979), 74–91.
- Sheena S Iyengar and Mark R Lepper. 2000. When choice is demotivating: Can one desire too much of a good thing? Journal of personality and social psychology 79, 6 (2000), 995.
- When more is less: the paradox of choice in search engine use. In Proceedings of the 32nd international ACM SIGIR conference on Research and development in information retrieval. 516–523.
- Delegated Classification. Advances in Neural Information Processing Systems (2023).
- B. Schwartz. 2004. The paradox of choice: Why more is less. HarperCollins Publishers.
- How much choice is too much? Contributions to 401 (k) retirement plans. Pension design and structure: New lessons from behavioral finance 83 (2004), 84–87.
- Richard H Thaler. 2015. Misbehaving: The making of behavioral economics. WW Norton & Company.
- David Zuckerman. 2007. Linear Degree Extractors and the Inapproximability of Max Clique and Chromatic Number. Theory of Computing 3, 6 (2007), 103–128.