Stackelberg POMDP: A Reinforcement Learning Approach for Economic Design

Understand

We introduce a reinforcement learning framework for economic design where the interaction between the environment designer and the participants is modeled as a Stackelberg game.

• In this game, the designer (leader) sets up the rules of the economic system, while the participants (followers) respond strategically.
• We integrate algorithms for determining followers' response strategies into the leader's learning environment, providing a formulation of the leader's learning problem as a POMDP that we call the Stackelberg POMDP.
• We prove that the optimal leader's strategy in the Stackelberg game is the optimal policy in our Stackelberg POMDP under a limited set of possible policies, establishing a connection between solving POMDPs and Stackelberg games.