TY - GEN

T1 - Combinatorial Contracts

AU - Dutting, Paul

AU - Ezra, Tomer

AU - Feldman, Michal

AU - Kesselheim, Thomas

N1 - Publisher Copyright:
© 2022 IEEE.

PY - 2022

Y1 - 2022

N2 - We introduce a new model of combinatorial contracts in which a principal delegates the execution of a costly task to an agent. To complete the task, the agent can take any subset of a given set of unobservable actions, each of which has an associated cost. The cost of a set of actions is the sum of the costs of the individual actions, and the principal's reward as a function of the chosen actions satisfies some form of diminishing returns. The principal incentivizes the agents through a contract, based on the observed outcome. Our main results are for the case where the task delegated to the agent is a project, which can be successful or not. We show that if the success probability as a function of the set of actions is gross substitutes, then an optimal contract can be computed with polynomially many value queries, whereas if it is submodular, the optimal contract is NP-hard. All our results extend to linear contracts for higher-dimensional outcome spaces, which we show to be robustly optimal given first moment constraints. Our analysis uncovers a new property of gross substitutes functions, and reveals many interesting connections between combinatorial contracts and combinatorial auctions, where gross substitutes is known to be the frontier for efficient computation.

AB - We introduce a new model of combinatorial contracts in which a principal delegates the execution of a costly task to an agent. To complete the task, the agent can take any subset of a given set of unobservable actions, each of which has an associated cost. The cost of a set of actions is the sum of the costs of the individual actions, and the principal's reward as a function of the chosen actions satisfies some form of diminishing returns. The principal incentivizes the agents through a contract, based on the observed outcome. Our main results are for the case where the task delegated to the agent is a project, which can be successful or not. We show that if the success probability as a function of the set of actions is gross substitutes, then an optimal contract can be computed with polynomially many value queries, whereas if it is submodular, the optimal contract is NP-hard. All our results extend to linear contracts for higher-dimensional outcome spaces, which we show to be robustly optimal given first moment constraints. Our analysis uncovers a new property of gross substitutes functions, and reveals many interesting connections between combinatorial contracts and combinatorial auctions, where gross substitutes is known to be the frontier for efficient computation.

KW - contract theory

KW - gross substitutes

KW - moral hazard

UR - http://www.scopus.com/inward/record.url?scp=85127213015&partnerID=8YFLogxK

U2 - 10.1109/FOCS52979.2021.00084

DO - 10.1109/FOCS52979.2021.00084

M3 - פרסום בספר כנס

AN - SCOPUS:85127213015

T3 - Proceedings - Annual IEEE Symposium on Foundations of Computer Science, FOCS

SP - 815

EP - 826

BT - Proceedings - 2021 IEEE 62nd Annual Symposium on Foundations of Computer Science, FOCS 2021

PB - IEEE Computer Society

Y2 - 7 February 2022 through 10 February 2022

ER -