Personalised incentives with constrained regulator's budget

Lucas Javaudin, Andrea Araldo () and André de Palma ()
Additional contact information
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, NeSS-SAMOVAR - Network Systems and Services - SAMOVAR - Services répartis, Architectures, MOdélisation, Validation, Administration des Réseaux - IMT - Institut Mines-Télécom [Paris] - TSP - Télécom SudParis - IP Paris - Institut Polytechnique de Paris
André de Palma: THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université

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Abstract: We consider a regulator driving individual choices towards increasing social welfare by providing personal incentives. We formalize and solve this problem by maximizing social welfare under a budget constraint. The personalized incentives depend on the alternatives available to each individual and on her preferences. A polynomial time approximation algorithm computes a policy within few seconds. We analytically prove that it is boundedly close to the optimum. We efficiently calculate the curve of social welfare achievable for each value of budget within a given range. This curve can be useful for the regulator to decide the appropriate amount of budget to invest. We extend our formulation to enforcement, taxation and non-personalizedincentive policies. We analytically show that our personalized-incentive policy is also optimal within this class of policies and construct close-to-optimal enforcement and proportional tax-subsidy policies. We then compare analytically and numerically our policy with other state-of-the-art policies. Finally, we simulate a large-scale application to mode choice to reduce CO2 emissions.

Keywords: Personalized incentives; Knapsack problem; Tax policy; CO2 emissions; Modal shift (search for similar items in EconPapers)
Date: 2023-11-23
Note: View the original document on HAL open archive server: https://hal.science/hal-04304703v1
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Published in Transportmetrica A: Transport Science, 2023, pp.1 - 43. ⟨10.1080/23249935.2023.2284353⟩

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Related works:
Working Paper: Personalised incentives with constrained regulator's budget (2023)
Working Paper: Personalized Incentives with Constrained Regulator’s Budget (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04304703

DOI: 10.1080/23249935.2023.2284353

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