Incentives for Optimal Multi‐level Allocation of HIV Prevention Resources

HIV/AIDS prevention funds are often allocated at multiple levels of decision‐making. Optimal allocation of HIV prevention funds maximizes the number of HIV infections averted. However, decision makers often allocate using simple heuristics such as proportional allocation. We evaluate the impact of using incentives to encourage optimal allocation in a two‐level decision‐making process. We model an incentive based decision‐making process consisting of an upper‐level decision maker allocating funds to a single lower‐level decision maker who then distributes funds to local programs. We assume that the lower‐level utility function is linear in the amount of the budget received from the upper‐level, the fraction of funds reserved for proportional allocation, and the number of infections averted. We assume that the upper level objective is to maximize the number of infections averted. We illustrate with an example using data from California, U.S.