Mechanism Design Theory

Mechanism Design Theory is a branch of economic theory that focuses on creating systems or rules to achieve desired outcomes when individuals have private information and their own interests. It’s like designing a game where players can’t be completely trusted to reveal the truth about their preferences or preferences for cooperation. Researchers aim to structure incentives so that when players act in their own self-interest, the overall result is beneficial for everyone involved. Essentially, it’s about creating frameworks that lead to good outcomes, despite the complexities and competing interests of the participants.