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Decentralized decision making posts many interesting questions in front of us. Uncoordinated decentralized decision making system usually performs less efficiently than a centralized decision making system. Naturally one would like to coordinate the decentralized system to achieve the same perfomance as the centralized one.
If the system is a consortium of self-intersted players, the first thing one needs to make sure is that each player is willing to take part in the coordination. One needs to make sure that the allocation of profit will make every player better off, comparing to the uncoordinated system. What would be the right allocation of profit? On the other hand, if the system has a principle who manages the system through a group of agents, some different questions emerge. First, the principle can decide the functionality of each agent, that is, what decision each agent gets to make. What would be the right allocation of decision power? Second, the sum of the awards the agents receive is not the total system profit. Neither is the sum of the costs the agents observe necessarily the total system cost. How should the awards and costs be allocated to each agent so that their objectives are aligned with the objective of the principle?
There are also some questions common to decentralied decision making systems. The different players/agents obviously need to communicate with each other. What information should they exchange? What format should the information be exchanged in: for example, should the confidence interval of the forecast be sent to the supplier in addition to the point estimation? Should there be some well-defined protocols in the system? Also, each player/agent will keep track of the performance of others in the system as well as his own. What metrics should be in place at each player/agent to ensure good performance as well as to prevent any player/agent from gaming the system? To answer all these challenging questions, interdiscipline coordination is surely a must, including operations management, game theory, statistics, ect.
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