Large-scale allocation of personalized incentives

Lucas Javaudin, André de Palma () and Andrea Araldo ()
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Andrea Araldo: IP Paris - Institut Polytechnique de Paris, TSP - RST - Département Réseaux et Services de Télécommunications - IMT - Institut Mines-Télécom [Paris] - TSP - Télécom SudParis - IP Paris - Institut Polytechnique de Paris, METHODES-SAMOVAR - Méthodes et modèles pour les réseaux - SAMOVAR - Services répartis, Architectures, MOdélisation, Validation, Administration des Réseaux - IMT - Institut Mines-Télécom [Paris] - TSP - Télécom SudParis - IP Paris - Institut Polytechnique de Paris

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Abstract: We consider a regulator willing to drive individual choices towards increasing social welfare by providing incentives to a large population of individuals. For that purpose, we formalize and solve the problem of f inding an optimal personalized-incentive policy: optimal in the sense that it maximizes social welfare under an incentive budget constraint, personalized in the sense that the incentives proposed depend on the alternatives available to each individual, as well as her preferences. We propose a polynomial time approximation algorithm that computes a policy within few seconds and we analytically prove that it is boundedly close to the optimum. We then extend the problem to efficiently calculate the Maximum Social Welfare Curve, which gives the maximum social welfare achievable for a range of incentive budgets (not just one value). This curve is a valuable practical tool for the regulator to determine the right incentive budget to invest. Finally, we simulate a large-scale application to mode choice in a French department (about 200 thousands individuals) and illustrate the effectiveness of the proposed personalizedincentive policy in reducing CO2 emissions.

Keywords: Tax policy; CO2 emissions; Modal shift; H2; Q58; R41; Personalized; Knapsack problem (search for similar items in EconPapers)
Date: 2022-09-18
New Economics Papers: this item is included in nep-tre
Note: View the original document on HAL open archive server: https://hal.science/hal-03839571v1
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Published in 2022 IEEE 25th International Conference on Intelligent Transportation Systems (ITSC), Sep 2022, Macau, China. pp.4151-4156, ⟨10.1109/ITSC55140.2022.9922143⟩

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Related works:
Working Paper: Large-Scale Allocation of Personalized Incentives (2022)
Working Paper: Large-Scale Allocation of Personalized Incentives (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03839571

DOI: 10.1109/ITSC55140.2022.9922143

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