Trustworthy Reinforcement Learning for AI-Driven Urban Decision-Making: Sustainable Dynamic Pricing and Resource Optimization for Smart City Operations

Abstract

Rapid urbanization, increasing demand variability, and digitalisation of urban infrastructure require intelligent decision-support systems that can improve sustainability, resilience, and operational efficiency in smart city operations. Artificial intelligence (AI) and data-driven optimization offer strong potential for adaptive urban services, including dynamic pricing, demand response, resource allocation, and energy-aware management. However, many reinforcement learning applications still focus mainly on short-term performance while giving limited attention to transparency, fairness, stability, and accountability. This study proposes a trustworthy reinforcement learning framework for AI-driven urban decision-making, using sustainable dynamic pricing and resource optimization as mechanisms for adaptive and responsible decision-making. A custom reinforcement learning environment was developed using historical e-commerce transactional data as a methodological proxy to simulate interactions among demand, resource or inventory availability, service categories, price elasticity, and changing market conditions. Three reinforcement learning algorithms, namely Deep Q-Network, Proximal Policy Optimization, and Advantage Actor–Critic, were evaluated under comparable experimental conditions. Performance was assessed using profitability, decision stability, fairness-oriented pricing behavior, decision consistency, and interpretability. To improve transparency, trajectory-based policy audits and SHapley Additive exPlanations were applied to identify the main factors influencing pricing decisions. The results show that the Deep Q-Network agent achieved the most balanced performance, increasing total profit by 12.58% while recording no unethical price increases under low-demand conditions. Explainability analysis showed that stock or resource levels, demand shifts, and price elasticity were the strongest positive drivers of pricing actions, whereas inventory hoarding and unfavorable price increases reduced decision quality. The findings indicate that reinforcement learning can support sustainable and resilient urban decision-making when optimization objectives are combined with trustworthy AI principles. The proposed framework provides a practical basis for accountable AI-based decision-support systems in smart city operations, including demand-responsive services, resource optimization, sustainable dynamic pricing, and energy-aware management.