Optimal policy design for innovation diffusion: shaping today's incentives for transforming the future

Abstract

In this paper, we propose a new framework for the design of incentives aimed at promoting innovation diffusion in social influence networks. In particular, our framework relies on an extension of the Friedkin and Johnsen opinion dynamics model characterizing the effects of (i) short-memory incentives, which have an immediate yet transient impact, and (ii) long-term structural incentives, whose impact persists via an exponentially decaying memory. We propose to design these incentives via a model-predictive control (MPC) scheme over an augmented state that captures the memory in our opinion dynamics model, yielding a convex quadratic program with linear constraints. Our numerical simulations based on data on sustainable mobility habits show the effectiveness of the proposed approach, which balances large-scale adoption and resource allocation