Research Summary
Research Summary
Strength of Incentives
By: Jerry R. Green
Description
When economists analyze the incentive properties of decision making systems they assume that all economic agents are capable of optimizing their decisions and that they respond without error to the incentives that the system creates. In this project, Jerry R. Green will incorporate the more realistic response modelling under which everyone's choice is more likely to switch to a less than optimal alternative. The closer an alternative's payoff is to the optimum payoff, the more like it is to be chosen instead of the optimum. Designing robust incentive systems requires that individual responses be modelled through this more psychological, non-optimizing approach.