Behavioral Mechanism Design

Behavioral Mechanism Design is a field that blends economics with insights from psychology to create systems that influence people's decisions. Unlike traditional mechanisms, which assume people always act rationally, this approach recognizes that individuals may behave unpredictably due to biases or emotions. By understanding these behaviors through experiments, researchers can design rules and incentives—like games or auctions—that encourage desired outcomes. Essentially, it aims to shape interactions so that people make choices that lead to beneficial results for themselves and society, despite their sometimes irrational tendencies.