2025/09/02 by Raj Kiriti Velicheti, Velicheti, Raj Kiriti, Subhonmesh Bose +3
Decision Sciences · Social Sciences · #Auction Theory and Applications #Computer Science and Game Theory (cs.GT) #Experimental Behavioral Economics Studies #FOS: Computer and information sciences #FOS: Electrical engineering #FOS: Mathematics #Game Theory and Applications #Multiagent Systems (cs.MA) #Optimization and Control (math.OC) #Systems and Control (eess.SY) #electronic engineering #information engineering
paper · pdf · doi:10.48550/arxiv.2509.02493
openalex publication_date 2025/09/02 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Incentive design deals with interaction between a principal and an agent where the former can shape the latter's utility through a policy commitment. It is well known that the principal faces an information rent when dealing with an agent that has informational advantage. In this work, we embark on a systematic study of the effect of information asymmetry in incentive design games. Specifically, we first demonstrate that it is in principal's interest to decrease this information asymmetry. To mitigate this uncertainty, we let the principal gather information either by letting the agent shape her belief (aka Information Design), or by paying to acquire it. Providing solutions to all these cases we show that while introduction of uncertainty increases the principal's cost, letting the agent shape its belief can be advantageous. We study information asymmetry and information acquisition in both matrix games and quadratic Gaussian game setups.