Designing Incentive Schemes Based on Intervention: The Case of Imperfect Monitoring
In this paper, we propose a class of incentive schemes based on intervention. We develop a general game-theoretic framework for the design of intervention schemes under imperfect monitoring. We examine a model of slotted multiaccess communication to illustrate our framework. In this model, an intervention device monitors the behavior of agents for a period called the test phase and takes an intervention action which affects agents for the remaining period called the intervention phase. We analyze the problems of designing an optimal intervention rule given a length of the test phase and choosing an optimal length of the test phase. Intervention schemes can induce cooperative behavior by applying intervention following signals with a high likelihood of deviation. Increasing the length of the test phase has two counteracting effects: It improves the quality of signals, but at the same time it weakens the impact of intervention due to increased delay.
Keywordsintervention incentive schemes slotted multiaccess communication game theory
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