Contract Theory Approach Research Articles

Secure incentive mechanism for energy trading in computing force networks enabled internet of vehicles: a contract theory approach

Secure incentive mechanism for energy trading in computing force networks enabled internet of vehicles: a contract theory approach

An incentive mechanism design for federated learning with multiple task publishers by contract theory approach

In the process of model training of the federated learning system, how to design an incentive mechanism to attract more high-quality worker nodes to join is a key issue. The existing researches on federated learning incentive mechanism only consider the scenario of single task publisher with multiple worker nodes. In the scenario of multi task publishers and multiple worker nodes, the competition between different task publishers makes the entire research process more complicated, and the contract design in the single task publisher scenario cannot be directly applied. To solve this problem, this paper proposes an incentive mechanism based on contract theory in the multi task publisher scenario and studies its application in federated learning. Simulation experiments show that this mechanism is effective for federated learning and can achieve the purpose of encouraging worker nodes to join and improve the efficiency of federated learning.

Incentive mechanism design for two-layer mobile data offloading networks: A contract theory approach

Incentive mechanism design for two-layer mobile data offloading networks: A contract theory approach

A Contract Theory Approach to Dynamic Incentive Mechanism and Control Synthesis for Moral Hazard in Power Grids

This article proposes a synthesis of a novel dynamic incentive mechanism and optimal control for moral hazard in power grids with real-time power balancing markets. For the liberalization of the balancing markets, it is an indispensable requirement to integrate dynamic subsystems controlled by individual agents into a stabilized power grid via an incentive mechanism. Meanwhile, without the proper use of the agents’ private information, high-speed market-clearing achieving an appropriate social objective cannot be ensured. Consequently, a market mechanism is needed that contains some dynamic incentive mechanisms for eliciting their private information and proper controls under moral hazard, which is called incentivizing market in this article. Drawing on dynamic contract theory in microeconomics, a novel method for designing the incentivizing market is proposed on the basis of the integration of economic models and a dynamic grid model. Conventional contract problems have been analyzed for both static and dynamic systems whose control inputs are operated directly by an independent system operator. However, these analyses do not accord with the design for the dynamic incentive mechanism in the incentivizing market. The approach in this article requires adapting the dynamic contract problems to the market. To achieve this objective, the fundamental formulas for optimal design are established and the basic properties of the designed market based on a model-based approach are clarified. We next propose optimal pricing and control synthesis for social-objective designs. The performance of our proposed method is illustrated through simulations with an Institute of Electrical Engineers of Japan (IEEJ) East 30-machine system.

Should the firm or the employee pay for upskilling? A contract theory approach

Upskilling involves costly effort on behalf of existing employees to acquire new skills that are required to execute high value‐added projects. A firm‐financed training scheme allows the screening of applicants but comes with the cost of hidden actions, as some employees might train themselves yet continue working on low‐value projects. A policy relying on worker self‐training and incentive compatible contracts allows attracting more workers to high‐value projects, yet it must grant a positive informational rent to flexible workers. The analysis reveals the optimal contract specific to each of the two training schemes. The profit comparison shows that the training strategy depends on how large is the net value created by upskilling, which is a characteristic of the business or industry.

Switching Control for Euler-Lagrange Dynamics: An Incremental Stability Approach

This paper discuses the stabilization problem in an Euler-Lagrange dynamics in the incremental stability framework. The work proposes the analysis in bimodal switched domain. The switching here is introduced intentionally in terms of control action to enhance robustness. In such setting, we derive sufficient conditions using matrix measure to show incremental stability in each mode and overall switched system. The proposition uses contraction theory approach to establish incremental stability. In this article, the selection of switching surface is as per the desired characteristics to be achieved. The objective is to minimise the stabilization error irrespective of the initial conditions, which is an inherent advantage of using Contraction theory. The adoption of this technique simplifies the analysis compared to the conventional framework. The efficacy of artefact is well supplemented by the simulation results.

Modal shift ambitions of large North European ports: A contract-theory perspective on the role of port managing bodies

Port managing bodies (PMBs) need to respond to increased societal pressures for improving environmental performance. For many PMBs, a modal shift (MS) from road to rail and barge transport (where available) represents a strategic priority. Yet, in practice, few PMBs have set clear MS targets or have been able to achieve their MS objectives at the level of the port cluster. In this context, the extant port management literature has not yet provided actionable and generally applicable conceptual guidance for PMBs towards achieving ambitious MS goals. In this paper, we develop such guidance by following a contract theory approach to the effectiveness of MS strategies implemented by PMBs. We argue that a PMB, in its role of port cluster manager, can facilitate a MS through strategically deploying governance mechanisms based on sound economic theory. Here, an arsenal of incentives and penalties can be used to push port users (PUs) towards achieving MS targets. Building upon insight from contract theory, we also assess the importance of information management as a prerequisite for a successful MS strategy. We formulate strategic directions for PMBs and identify a future research agenda that should allow improved understanding of how MS goals can be achieved in real world settings.

Learning-based Robust Motion Planning With Guaranteed Stability: A Contraction Theory Approach

This letter presents Learning-based Autonomous Guidance with RObustness and Stability guarantees (LAG-ROS), which provides machine learning-based nonlinear motion planners with formal robustness and stability guarantees, by designing a differential Lyapunov function using contraction theory. LAG-ROS utilizes a neural network to model a robust tracking controller independently of a target trajectory, for which we show that the Euclidean distance between the target and controlled trajectories is exponentially bounded linearly in the learning error, even under the existence of bounded external disturbances. We also present a convex optimization approach that minimizes the steady-state bound of the tracking error to construct the robust control law for neural network training. In numerical simulations, it is demonstrated that the proposed method indeed possesses superior properties of robustness and nonlinear stability resulting from contraction theory, whilst retaining the computational efficiency of existing learning-based motion planners.

Précis: Freedom to Care

ABSTRACT This summary of Freedom to Care begins with the core claims and conceptualizations upon which the theory of liberal dependency care rests. It then summarizes the book’s chapters. The first five chapters (Part I) delineate its theoretical foundations, which include the two-level contract theory approach to distributive justice for caregiving arrangements. In Part II of the book, chapters six through nine, I formulate liberal proposals for justice-enhancing social change before identifying cross-cultural metrics of justice for the internal evaluation of caregiving arrangements.

A Contract Theory Approach to Islamic Financial Securities with an Application to Diminishing Mushārakah

This paper demonstrates how the contract theory framework can and should complement standard financial mathematics for analysing Islamic financial securities (IFSs). It is motivated by the perception that most valuations of IFSs are rather simplistic and are as simple as risk and reward, leading to very simplistic investment strategies, especially by buyers. In fact, there are more dimensions to IFSs and IF in general which can only be properly analysed with more advanced approaches, such as contractual issues which are well-recognised and discussed in the fields of Islamic commercial law and contract theory but not always considered in valuation models. Contract theory can bring together financial mathematics and contractual issues, providing a more sophisticated framework for analysing IFSs. This paper aims to demonstrate this by providing a brief outline of the contract theory approach, followed by a simple demonstration of its use in the analysis of diminishing mushārakah (DM) contracts. The resulting model led to three main conclusions regarding DM contracts: That (i) finance seekers have no ready incentive to spend on asset maintenance, (ii) finance seekers will only spend on asset maintenance if their marginal benefit from the asset’s appreciation is greater than the financier’s share of the asset, and (iii) if the magnitude of asset appreciation and depreciation is equal, an increase in either will also increase the optimal level of spending on asset maintenance.

An Equilibrium Theory of Retirement Plan Design

We develop an equilibrium theory of employer-sponsored retirement plan design using a behavioral contract theory approach. The operation of the labor market results in retirement plans that generally cater to, rather than correct, workers’ mistakes. Our theory provides new explanations for a range of facts about retirement plan design, including the use of employer matching contributions and the use of default contribution rates in automatic enrollment plans that lower many workers’ savings. We provide novel evidence for our theory from a sample of plans. (JEL D86, G51, J26, J32, J41)

Contraction Theory Approach to Disturbance Observer Based Filtered Backstepping Design

Various practical applications use filtered backstepping technique, which follows the same procedure as backstepping design but uses high gain filters to circumvent the analytical computation of derivatives. As a result, there exists a time-scale separation between the system dynamics and the fast filter dynamics. This paper proposes a new contraction theory-based technique to design a high gain disturbance observer-based filtered backstepping controller and to quantify the convergence bounds in terms of design parameters. The quantification of the bounds explicitly shows the dependency of the closed-loop performance on various parameters, which in turn provide more ways to tune the performance apart from reducing the magnitude of filter parameter. Unlike the existing results, the proposed approach relaxes the conservative restriction, required on the filter parameter to achieve a satisfactory closed loop performance. The efficacy of the proposed method is verified through simulation examples.

Working Time and Wage Rate Differences: A Contract Theory Approach

In the labor economics literature, discrimination is often defined as a situation in which identically productive workers, placed in the same working conditions, are treated unequally, being assigned contracts involving in particular different hourly wage rates. In the proposed analysis, the contract theory approach is applied, contributing to explain how in some circumstances such differences take place, even if contract discrimination and productivity differences are strictly ruled out. It is assumed that workers types differ only in their leisure consumption preferences and in their availability. A labor cost-minimizing firm offers a menu of labor contracts, and let workers self-select. In this non-discriminating setting the model reveals the possibility of a paradoxical situation in which the less demanding workers obtain a higher wage rate. It brings out external effects between types and the existence of a quantum (a minimum number) of demanded workers for some type.

Small-Scale Renewable Energy Source Trading: A Contract Theory Approach

Energy informatics is expected to be significant to improve energy trading efficiency. In this framework, the cooperation among small-scale electricity suppliers and the efficient economic incentives to consumers play important roles to maximize the profits of each small-scale electricity supplier and a single aggregator. The aggregator first collects electricity from the suppliers and/or purchases electricity from the main macrogrid, then sells the electricity to the consumers. A coalitional game model in the presence of direct trading among suppliers is presented and a fair revenue division scheme based on the asymptotic Shapley value is derived. Moreover, an optimal contract-based scheme for electricity trading between the aggregator and consumers is proposed. The scheme enables the aggregator to generate more profits when it is for-profit and preferably supports it to serve all consumers when it is non-for-profit.

A contract theory approach to special and differential treatment and the WTO

PurposeThis paper is prompted by the dissatisfaction of developing countries regarding the grant of special and differential treatment (SDT) under the legal framework of the World Trade Organisation (WTO). As a result of such dissatisfaction, the Doha Round of multilateral trade negotiations explicitly called for a review of such treatment with a view to making it more precise, effective and operational. This mandate has not yet been met to the satisfaction of many developing countries. This paper aims to provide an alternative way of examining and evaluating the contestation which exists regarding SDT in the WTO.Design/methodology/approachThis paper uses the conceptual framework provided by the economic contract theory and in particular, the concept of the incomplete contract to provide a scaffold for analysing SDT. This approach is intended to offer insights beyond those elucidated so far in the literature on the topic.FindingsThis paper, by using an economic contract theory approach, finds that SDT is constructed as an incomplete contract. Furthermore, the suboptimal outcomes associated with incomplete contracts are apparent in the constitution of SDT. This finding is useful in both an evaluative and programmatic sense, providing us with an alternative entry point to explain some of the shortcomings with SDT, as well as garnering us with a useful conceptual tool to think upon how SDT can be improved.Originality/valueThe paper contributes to the literature on SDT within the WTO in particular and differential treatment in international law in general. Drawing on literature on the WTO as an incomplete contract, the paper provides an original frame for analyzing SDT and draws attention, in particular, to the utility of the economic contract theory as a programmatic and evaluative frame for SDT and differential treatment more generally.

An Equilibrium Theory of Retirement Plan Design

We develop an equilibrium theory of employer-sponsored retirement plan design using a behavioral contract theory approach. The operation of the labor market results in retirement plans that generally cater to, rather than correct, workers' mistakes. Our theory provides novel explanations for a range of facts about retirement plan design, including the use of employer matching contributions that result in cross-subsidization of rational workers by myopic workers, the use of default employee contribution rates in automatic enrollment plans that lower, rather than raise, workers' savings, and the inclusion of high-fee funds among plans' investment options. These equilibrium outcomes call into question the practice of depending on employers to design plans to counteract the mistakes of workers.

A Contraction Theory Approach to Singularly Perturbed Systems

In this technical note, we revisit standard results on singular perturbations and multiple time-scales using convergence analysis tools based on nonlinear contraction theory. Specifically, assuming that the fast and slow subsystems are each partially contracting, we obtain explicit bounds on the convergence rate of the trajectories to the slow manifold and on the asymptotic error between the trajectories of the singularly perturbed system and those of the reduced system. As an application example, we illustrate the design of a biomolecular insulation device.

Trust‐based or performance‐based management—a study of employment contracting in hospitals

Hospitals are frequently changing managerial practices due to numerous public sector reforms taking place. In general, these reforms include the making and monitoring of contracts that regulate relations between the hospitals and their professional staffs. The aim of this paper is to discuss some main characteristics of the contracts that regulate the perceived relations between physicians as employees and the public hospital as employer. The theoretical framework is based on a contract theory approach. The empirical data is based on survey data from full-time employed physicians in the medical and surgical divisions in one of the largest university hospitals in Norway. This study shows that perceived obligations and psychological contracts indicate high degree of relational contracts between the hospital and the physicians. These socio-cultural elements should be recognized as important mechanisms of coordination and communication when policy makers and hospital managers are designing hospital management control systems.

A Contraction Theory Approach to Stochastic Incremental Stability

We investigate the incremental stability properties of It\^o stochastic dynamical systems. Specifically, we derive a stochastic version of nonlinear contraction theory that provides a bound on the mean square distance between any two trajectories of a stochastically contracting system. This bound can be expressed as a function of the noise intensity and the contraction rate of the noise-free system. We illustrate these results in the contexts of stochastic nonlinear observers design and stochastic synchronization.

Design of Asymptotically Convergent Frequency Estimator Using Contraction Theory

The problem of estimating unknown frequencies of a sinusoidal signal simultaneously is a classical problem in signal and system theory. Many approaches and algorithms are proposed in literature to develop estimators for a measurable sinusoidal signal having multiple sinusoids with unknown amplitudes, frequencies and phases. In this work, an asymptotically convergent frequency estimator is given for estimation of n-unknown frequencies of a measurable sinusoidal signal. The contraction theory approach is adopted to show the asymptotic convergence of the proposed estimator in quite a simplified manner. Approach given here exploits the results of contraction theory related to semi-contracting systems. The nonlinear estimator based on dynamic system approach, guarantees global boundedness and convergence of the state and frequency estimation for all initial conditions and frequency values. It further ensures simultaneous globally convergent estimation of states and frequencies of a sinusoid involving multiple frequencies. Numerical simulations are presented for different combinations of frequencies to justify the claim.