Mechanism Design : An Introduction
A salient feature of economic environments is that socially desirable outcomes depend critically on information that is typically only known privately to agents. Strategically sophisticated (rational) agents cannot be counted upon to reveal their private information truthfully if they stand to gain
by misrepresenting their private information. Such misrepresentations may lead to substantial departures from socially desirable outcomes. The theory of Mechanism Design is a branch of economic theory that recognizes that in environments where social outcomes depend on private information, agents must be presented with appropriate incentives to volunteer their information, and concerns itself
with designing institutions (mechanisms) which deliver this goal. We illustrate with the canonical voting model, where we make apparent the central role of domain restrictions in resolving issues of incentives.
Shurojit Chatterji is an economic theorist at the School of Economics, Singapore Management University. His principal research field is microeconomic theory. He has worked on economic dynamics under learning and on mechanism Design. He teaches in the undergraduate program, in the doctoral program and in various postgraduate professional Master’s programs in the university.