Discounting the future in systems theory

  • Authors:
  • Luca de Alfaro;Thomas A. Henzinger;Rupak Majumdar

  • Affiliations:
  • Department of Computer Engineering, UC Santa Cruz;Department of Electrical Engineering and Computer Sciences, UC Berkeley;Department of Electrical Engineering and Computer Sciences, UC Berkeley

  • Venue:
  • ICALP'03 Proceedings of the 30th international conference on Automata, languages and programming
  • Year:
  • 2003

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Abstract

Discounting the future means that the value, today, of a unit payoffis 1 if the payoff occurs today, a if it occurs tomorrow, a2 if it occurs the day after tomorrow, and so on, for some real-valued discount factor 0 ≤ a ≤ 1. Discounting (or inflation) is a key paradigm in economics and has been studied in Markov decision processes as well as game theory. We submit that discounting also has a natural place in systems engineering: for nonterminating systems, a potential bug in the faraway future is less troubling than a potential bug today. We therefore develop a systems theory with discounting. Our theory includes several basic elements: discounted versions of system properties that correspond to the ω-regular properties, fixpoint-based algorithms for checking discounted properties, and a quantitative notion of bisimilarity for capturing the difference between two states with respect to discounted properties. We present the theory in a general form that applies to probabilistic systems as well as multicomponent systems (games), but it readily specializes to classical transition systems. We show that discounting, besides its natural practical appeal, has also several mathematical benefits. First, the resulting theory is robust, in that small perturbations of a system can cause only small changes in the properties of the system. Second, the theory is computational, in that the values of discounted properties, as well as the discounted bisimilarity distance between states, can be computed to any desired degree of precision.