The Nobel Prize in Economic Sciences this year went to the American economists Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson for “having laid the foundations of mechanism design theory”.
Mechanism design theory provides a framework to design rules of a game to achieve specific outcomes, even though players may be self-interested. A simple example of such ‘rules’, provided by BBC’s Evan Davis at Evanomics, is how a mother lets one child divide a cake in two, and the other to choose first which half of the cake to have. Apart from dividing cakes, mechanism design theory allows for the analysis of allocation mechanisms such as regulations, market prices and management, focusing on problems associated with private information and incentives.
Tangent’s take:
====================================================================Mechanism design theory provides a framework to design rules of a game to achieve specific outcomes, even though players may be self-interested. A simple example of such ‘rules’, provided by BBC’s Evan Davis at Evanomics, is how a mother lets one child divide a cake in two, and the other to choose first which half of the cake to have. Apart from dividing cakes, mechanism design theory allows for the analysis of allocation mechanisms such as regulations, market prices and management, focusing on problems associated with private information and incentives.
Tangent’s take:
- Keep a look out for Economic Society’s own (albeit amateur) experiments in this area—with pizzas!
Please add or edit as you see fit.
Lovely picture of pie taken from here. It's an Attrib-NonDeriv license, which means you would need a link to the pic if you use it. But the picture's not really necessary -- I'm hungry, that's all.
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