Soft Regulation with Crowd Recommendation: Coordinating Self-Interested Agents in Sociotechnical Systems under Imperfect Information

Luo, Yu; Iyengar, Garud N.; Venkatasubramanian, Venkat

Regulating emerging industries is challenging, even controversial at times. Under-regulation can result in safety threats to plant personnel, surrounding communities, and the environment. Over-regulation may hinder innovation, progress, and economic growth. Since one typically has limited understanding of, and experience with, the novel technology in practice, it is difficult to accomplish a properly balanced regulation. In this work, we propose a control and coordination policy called soft regulation that attempts to strike the right balance and create a collective learning environment. In soft regulation mechanism, individual agents can accept, reject, or partially accept the regulator’s recommendation. This non-intrusive coordination does not interrupt normal operations. The extent to which an agent accepts the recommendation is mediated by a confidence level (from 0 to 100%). Among all possible recommendation methods, we investigate two in particular: the best recommendation wherein the regulator is completely informed and the crowd recommendation wherein the regulator collects the crowd’s average and recommends that value. We show by analysis and simulations that soft regulation with crowd recommendation performs well. It converges to optimum, and is as good as the best recommendation for a wide range of confidence levels. This work sheds a new theoretical perspective on the concept of the wisdom of crowds.


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Academic Units
Chemical Engineering
Industrial Engineering and Operations Research
Public Library of Science
Published Here
April 27, 2016