Operations and the Sharing Economy: Mechanisms for On-Demand Resource Sharing with Military Applications
Abstract
Major Goals: This project aims to develop a theoretical framework and operational tools for the sharing economy. Our research will build on the recent success of real-world sharing-economy marketplaces, and focus on developing a formal framework for reasoning about and optimizing such settings. In addition, our work is motivated by potential applications in military contexts, in particular, to developing platforms that allow for sharing resources (vehicles/equipment/services/etc.) between armed forces in an on-demand manner, in order to achieve greater operational efficiency; this serves to guide the specific choice of topics of proposed research. Markets have long been viewed as a means of solving large optimization problems in a decentralized manner. They serve as conduits for aggregating information from many sources, and coordinating the activities of participating agents towards maximizing social welfare. Developments in internet and mobile technology has led to the creation of new online marketplaces that support economic transactions outside the ambit of traditional markets. In particular, new `sharing economy platforms have enabled the allocation of non-perishable resources in an on-demand and decentralized manner. These platforms have had great success in reducing inefficiencies and utilizing untapped resources in many diverse settings -- the FERC electric power market, ad-auctions at Google and Facebook; Amazon and eBay for goods; Lyft and Uber for transportation; Upwork and Taskrabbit for labor; Airbnb for lodging; etc. In more detail, the goal of this project is to tackle a set of foundational operational questions of sharing economy platforms, guided in part by their potential military applications. Armed forces in different parts of the world have experimented with sharing resources, with varying success; market mechanisms (running on underlying secure communications platforms) can help formalize and scale these ad-hoc arrangements. However to realize such military sharing platforms, we first need a better formal understanding and better tools, in particular, in four critical dimensions: 1. Self-calibrating and robustness of market mechanisms - Market mechanisms are often particularly useful for decentralized optimization as they can adapt to underlying system parameters and produce outcomes which are near-optimal and yet robust to system fluctuations. Our research will develop ways to formalize this self-calibration property in sharing economy markets, and understand how to design mechanisms that lead to more stable and efficient outcomes. 2. Dynamic, On-Demand Resource Positioning and Allocation - From an operational standpoint, incorporating on- demand sharing facilities involves rethinking the positioning and allocation of various resources. Our research will formulate general models and algorithms that work across a variety of diverse platforms. 3. Market design with risk-sensitive objectives - Sharing economy marketplaces have traditionally focused on risk-neutral agents and expected welfare/revenue objectives. Many settings however require more diverse objectives, often including a mix of worst-case guarantees and revenue/welfare maximization. Our research will focus on rethinking the choice of objectives in market design, and how this affects the underlying mechanisms. 4. Non-monetary market mechanisms - Monetary control levers (dynamic pricing/auctions/penalties/etc.) are crucial components of most online marketplaces. The use of money, however, is inappropriate in many settings, in particular, for sharing platforms that operate within an organization (university/corporation/federal organization/etc.). Our research will build on recent developments in non-monetary mechanism design and study its application in sharing economy settings.
Document Details
- Document Type
- DoD Grant Award
- Publication Date
- Oct 11, 2018
- Source ID
- W911NF1710094
Entities
People
- Siddhartha Banerjee
Organizations
- Army Contracting Command
- Cornell University
- United States Army