# On the Value of Penalties in Time-Inconsistent Planning

## TL;DR

This paper explores the use of penalties as a more effective and computationally feasible alternative to prohibitions in designing commitment devices for time-inconsistent planning, demonstrating theoretical advantages and approximation algorithms.

## Contribution

It introduces a penalty-based commitment device that improves upon prohibition methods, providing a 2-approximation algorithm and analyzing the computational hardness of optimal penalty design.

## Key findings

- Penalties can be up to 1/β times more efficient than prohibitions.
- A 2-approximation algorithm for penalty allocation is presented.
- Optimal penalties are NP-hard to approximate within a ratio of 1.08192.

## Abstract

People tend to behave inconsistently over time due to an inherent present bias. As this may impair performance, social and economic settings need to be adapted accordingly. Common tools to reduce the impact of time-inconsistent behavior are penalties and prohibition. Such tools are called commitment devices. In recent work Kleinberg and Oren connect the design of prohibition-based commitment devices to a combinatorial problem in which edges are removed from a task graph $G$ with $n$ nodes. However, this problem is NP-hard to approximate within a ratio less than $\sqrt{n}/3$. To address this issue, we propose a penalty-based commitment device that does not delete edges but raises their cost. The benefits of our approach are twofold. On the conceptual side, we show that penalties are up to $1/\beta$ times more efficient than prohibition, where $\beta \in (0,1]$ parameterizes the present bias. On the computational side, we significantly improve approximability by presenting a $2$-approximation algorithm for allocating the penalties. To complement this result, we prove that optimal penalties are NP-hard to approximate within a ratio of $1.08192$.