Regret-Minimizing Project Choice

TL;DR

This paper develops a mechanism to minimize the worst-case regret of a principal choosing projects proposed by an agent, comparing single and multiple proposal environments and highlighting the advantages of multiproject proposals.

Contribution

It introduces a regret-minimizing mechanism for project selection and analyzes the benefits of allowing multiple proposals over a single proposal.

Findings

Multiproject environment offers better fallback options.

Agent's payoff with multiple proposals equals the maximum from individual proposals.

Mechanism ensures optimal worst-case regret performance.

Abstract

An agent observes the set of available projects and proposes some, but not necessarily all, of them. A principal chooses one or none from the proposed set. We solve for a mechanism that minimizes the principal's worst-case regret. We compare the single-project environment in which the agent can propose only one project with the multiproject environment in which he can propose many. In both environments, if the agent proposes one project, it is chosen for sure if the principal's payoff is sufficiently high; otherwise, the probability that it is chosen decreases in the agent's payoff. In the multiproject environment, the agent's payoff from proposing multiple projects equals his maximal payoff from proposing each project alone. The multiproject environment outperforms the single-project one by providing better fallback options than rejection and by delivering this payoff to the agent more efficiently.