Optimal Dynamic Incentive and Control Contract among Principal and Agents with Moral Hazard and Long-Term Average Reward

Yasuaki Wasa, Kenko Uchida

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

This paper addresses a novel incentive and control mechanism among a principal and multiple agents with long-term average reward in stochastically dynamical systems. In actual physical systems such as dynamic power systems, the principal called a system operator cannot directly operate the agents' control input in real time to guarantee the agents' voluntary decision makings. Meanwhile, the operations maximizing the agents' own profit is not always to achieve the social welfare maximization, which is the principal's objective. To avoid such moral hazard, adopting a contract theory approach, we first propose a dynamic incentive and control synthesis problem, where each agent and the principal maximize their own long-term average reward, respectively. We next derive an optimal contract condition and stability condition analytically. Finally, the performance of the proposed contract mechanism is numerically verified through simulations with a four area power network model.

Original languageEnglish
Title of host publication2019 12th Asian Control Conference, ASCC 2019
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages31-36
Number of pages6
ISBN (Electronic)9784888983006
Publication statusPublished - 2019 Jun
Event12th Asian Control Conference, ASCC 2019 - Kitakyushu-shi, Japan
Duration: 2019 Jun 92019 Jun 12

Publication series

Name2019 12th Asian Control Conference, ASCC 2019

Conference

Conference12th Asian Control Conference, ASCC 2019
CountryJapan
CityKitakyushu-shi
Period19/6/919/6/12

ASJC Scopus subject areas

  • Computer Science Applications
  • Control and Optimization
  • Mechanical Engineering

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  • Cite this

    Wasa, Y., & Uchida, K. (2019). Optimal Dynamic Incentive and Control Contract among Principal and Agents with Moral Hazard and Long-Term Average Reward. In 2019 12th Asian Control Conference, ASCC 2019 (pp. 31-36). [8764987] (2019 12th Asian Control Conference, ASCC 2019). Institute of Electrical and Electronics Engineers Inc..