Pricing for Information Revelation in Demand Response: A Strategic Communication Approach
Abstract
Many smart grid frameworks, such as demand response programs, require accurate information about consumers' parameters (e.g., flexibility) at the aggregator side to optimize grid operations. Existing works typically rely on perfect information assumptions or complex incentive-compatible mechanisms; however, in voluntary settings, and in the presence of strategic consumers, possibly implemented by automated intelligent agents, private parameters may be misreported due to strategic incentives. We analyze this communication setting using cheap-talk game theory, delivering four key insights. First, the nontrivial scenario of multiple strategic transmitters (consumers) turns out to be tractable for the case study of interest: we prove that complex strategic interactions among multiple consumers decouple into independent subgames. Second, we demonstrate that a preannounced retail price can be exploited as a design lever to control the information revealed by the consumers and therefore the overall system efficiency. Third, we derive a closed-form expression for the optimal uniform price that maximizes information revelation. Finally, we characterize the equilibrium structure to identify when communication is informative. Simulations show that a properly designed price for the communication scheme can recover up to 95% of the ideal system utility (i.e., under perfect information reporting), whereas a price-unaware choice leads to significant losses in social welfare.
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BibTeX
@misc{mohamad2026pricing,
title = {{Pricing for Information Revelation in Demand Response: A Strategic Communication Approach}},
author = {Hassan Mohamad and Chao Zhang and Samson Lasaulce and Olivier Beaude and Vineeth Satheeskumar Varma and Mounir Ghogho and Vincent Poor},
howpublished = {IEEE Transactions on Smart Grid},
year = {2026},
month = oct,
doi = {10.48550/arxiv.2603.03560},
url = {https://hal.science/hal-05638397v2},
note = {CC BY 4.0},
}
RIS
TY - UNPB
TI - Pricing for Information Revelation in Demand Response: A Strategic Communication Approach
AU - Hassan Mohamad
AU - Chao Zhang
AU - Samson Lasaulce
AU - Olivier Beaude
AU - Vineeth Satheeskumar Varma
AU - Mounir Ghogho
AU - Vincent Poor
PY - 2026
DA - 2026/10/29
PB - IEEE Transactions on Smart Grid
DO - 10.48550/arxiv.2603.03560
UR - https://hal.science/hal-05638397v2
AB - Many smart grid frameworks, such as demand response programs, require accurate information about consumers' parameters (e.g., flexibility) at the aggregator side to optimize grid operations. Existing works typically rely on perfect information assumptions or complex incentive-compatible mechanisms; however, in voluntary settings, and in the presence of strategic consumers, possibly implemented by automated intelligent agents, private parameters may be misreported due to strategic incentives. We analyze this communication setting using cheap-talk game theory, delivering four key insights. First, the nontrivial scenario of multiple strategic transmitters (consumers) turns out to be tractable for the case study of interest: we prove that complex strategic interactions among multiple consumers decouple into independent subgames. Second, we demonstrate that a preannounced retail price can be exploited as a design lever to control the information revealed by the consumers and therefore the overall system efficiency. Third, we derive a closed-form expression for the optimal uniform price that maximizes information revelation. Finally, we characterize the equilibrium structure to identify when communication is informative. Simulations show that a properly designed price for the communication scheme can recover up to 95% of the ideal system utility (i.e., under perfect information reporting), whereas a price-unaware choice leads to significant losses in social welfare.
SN - 1949-3053
SN - 1949-3061
ER -