A rational behavior of a consumer is analyzed when the user participates in a Peak Time Rebate (PTR) mechanism, which is a demand response (DR) incentive program based on a baseline. A multi-stage stochastic programming is proposed from the demand side in order to understand the rational decisions. The consumer preferences are modeled as a risk-averse function under additive uncertainty. The us...

We re-examine optimal monetary policy when lump-sum taxes are unavailable. Under commitment, we show that, with alternative utility functions to that considered in Nicolini’s related analysis, the direction of the incentive to cheat may depend on the initial level of government debt, with low debt creating an incentive towards surprise deflation, but high debt the reverse. Under discretion, we ...

Zero-one mechanisms are generalized take-it-or-leave-it mechanisms that consist of a price for each possible collection of goods. We illustrate that previously suggested conditions for when such mechanisms are optimal in the class of all incentive compatible and individually rational mechanisms are not strong enough. We provide necessary conditions for a schedule of prices to be optimal within ...

We design two computationally-e cient incentive-compatible mechanisms for combinatorial auctions with general bidder preferences. Both mechanisms are randomized, and are incentivecompatible in the universal sense. This is in contrast to recent previous work that only addresses the weaker notion of incentive compatibility in expectation. The rst mechanism obtains an O( √ m)-approximation of the ...

We show that incentive efficient allocations in economies with adverse selection and moral hazard can be determined as optimal solutions to a linear programming problem and we use duality theory to obtain a complete characterization of the optima. Our dual analysis identifies welfare effects associated with the incentives of the agents to truthfully reveal their private information. Because the...

In settings where full incentive-compatibility is not available, such as core-constraint combinatorial auctions and budget-balanced combinatorial exchanges, we may wish to design mechanisms that are as incentive-compatible as possible. This paper offers a new characterization of approximate incentive-compatibility by casting the pricing problem as a meta-game between the center and the particip...

We develop a dynamic agency model in which the agent controls current earnings via short-term effort and firm growth via long-term effort and the firm is subject to both shortand long-run shocks. Under the optimal contract, agency conflicts can induce both overand underinvestment in shortand long-term efforts compared to first best, leading to shortor long-termism in corporate policies. Exposur...

Although the performance of simple cognitive tasks can be enhanced if an incentive is provided, the mechanisms enabling such motivational control are not known. This study sought to uncover how mechanisms of attention and readiness are altered by reward-associated incentive stimuli. We measured EEG/ERP activity as human adults viewed a high- or low-incentive cue, experienced a short preparation...

We re-examine optimal monetary policy when lump-sum taxes are unavailable. Under commitment, we show that, with alternative utility functions to that considered in Nicolini’s related analysis, the direction of the incentive to cheat may depend on the initial level of government debt, with low debt creating an incentive towards surprise deflation, but high debt the reverse. Under discretion, we ...

A large literature on incentive mechanisms represents incentive constraints by the requirement that truthful reporting be a Bayesian equilibrium. This paper identifies mechanism design problems for which there is no loss in replacing Bayesian incentive compatibility by the stronger requirement of dominant strategies. We identify contexts where it is possible to change the transfer payments of a...