On the (In)approximability of Combinatorial Contracts

We study two combinatorial contract design models -- multi-agent and multi-action -- where a principal delegates the execution of a costly project to others. In both settings, the principal cannot observe the choices of the agent(s), only the project's outcome (success or failure), and incentivizes the agent(s) using a contract, which is a payment scheme that specifies the payment to the agent(s) upon a project's success. In the multi-agent setting, the project is delegated to a team of agents, and every agent chooses whether or not to exert effort. A success probability function specifies the probability of success for every subset of agents exerting effort. For the family of submodular success probability functions, Duetting et al. [2023] established a poly-time constant-factor approximation to the optimal contract, and left open whether this problem admits a PTAS. We show that no poly-time algorithm guarantees a better than 0.7-approximation to the optimal contract. For XOS functions, Duetting et al. [2023] give a poly-time constant approximation with value and demand queries. We show that with value queries only, one cannot get any constant approximation. In the multi-action setting, the project is delegated to a single agent, who can take any subset of a given set of actions. Here, a success probability function specifies the probability of success for any subset of actions. Duetting et al. [2021a] devised a poly-time algorithm for computing an optimal contract for gross substitutes success probability functions, and established NP-hardness with respect to submodular functions. We further strengthen this hardness result by showing that this problem does not admit any constant approximation either. For the broader class of XOS functions, we establish the hardness of obtaining a n-1/2+varepsilon-approximation for any varepsilon > 0.