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Mechanism design, sometimes called implementation theory or institution design, [1] is a branch of economics, social choice, and game theory that deals with designing game forms (or mechanisms) to implement a given social choice function. Because it starts with the end of the game (an optimal result) and then works backwards to find a game that ...
Preface. Note that the verb “to implement” is used in this book, and, when it is used, it is not meant to refer to implementation in the sense of the implementation literature. Hopefully, the intended meaning of the verb will become clear below. If you find errors of any kind in this book, please send me an email at tborgers@umich.edu.
May 21, 2015 · This book addresses these questions and more through an exploration of the economic theory of mechanism design. Mechanism design is reverse game theory. Whereas game theory takes the rules of the game as a given and makes predictions about the behavior of strategic players, the theory of mechanism design goes a step further and selects the ...
- Single-Dimensional Domains
- Proof
- Multi-Dimensional Domains
- Definition 4
- Definition 5
Consider first a domain of preferences for which the type \( { v_i(\cdot) } \) can be completely described by a single number v i , in the following way. For each player i, a subset of the alternatives are “losing” alternatives, and her value for all these alternatives is always 0. The other alternatives are “winning” alternatives, and the value fo...
The first observation is that the price of a winner cannot depend on her declaration, v i (only on the fact that she wins, and on the declaration of the other players). Otherwise, if it can depend on her declaration, then there are two possible bids v i and \( { v^\prime_i } \) such that i wins with both bids and pays p i and \( { p^\prime_i } \), ...
In the more general case, when the domain is multi-dimensional, the simple characterization from above does not fit, but it turns out that there exists a nice generalization. We describe two properties, cyclic monotonicity (Rochet ) and weak monotonicity (Bikhchandani et al. ), which achieve that. The exposition here also relies on . It will be con...
A social choice function f satisfies cycle monotonicity if for every player i, \( { v_{-i} \in V_{-i} } \), some integer \( { k \leq |A| } \), and \( { v_i1,\dots,v_ik \in V_i } \), where \( { a_j = f(v_ij, v_{-i}) } \) for \( { 1 \leq j \leq k } \), and \( { a_{k+1} = a_1 } \). This interesting structure implies, as another corollary, the fact tha...
A social choice function f satisfies W-MON if for every player i, every \( { v_{-i} } \), and every \( v_i, v^\prime_i \in V_i \) with \( f(v_i,v_{-i})=a \) and \( f(v^\prime_i,v_{-i})=b, v^\prime_i(b) - v_i(b) \geq v^\prime_i(a) - v_i(a) \). In other words, if the outcome changes from a to b when i changes her type from v i to \( { v^\prime_i } \)...
- Ron Lavi
Oct 31, 2021 · Mechanism design is a branch of microeconomics that explores how businesses and institutions can achieve desirable social or economic outcomes given the constraints of individuals' self-interest ...
ARTICLE. Introduction to mechanism design and implementation†. Eric Maskin. Director, Maskin Research Center of China’s Economic Development, Zhejiang University, Hangzhou, PR China. ABSTRACT. This article provides a brief introduction to mechanism design and implementation theory. First, it provides a brief definition of mechanism design.
18 Oct 2007. Mechanism design theory is a major breakthrough in the modern economic analysis of institutions and markets. It revolutionalised the way economists think about optimal institutions and regulation when governments don't “know it all.”. It has had a major impact on current policy-making and will continue to do so in the future.
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