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Mechanism Design and Markets
Overall, mechanism design increases our appreciation of markets, if only by showing how difficult it is to produce good outcomes while respecting the constraints that markets must satisfy. In a sense, mechanism design is to markets what genetic algorithms are to life. Theorists may one day design a better market mechanism or a better genetic code but for now the gains will come from using our deeper understanding to gently improve something that's already pretty marvelous.
That's me writing at Reason.
Posted by Alex Tabarrok on October 16, 2007 at 09:15 AM in Economics | Permalink
Comments
Alex,
I liked your example in the Globe and Mail story this morning making mechanism design "easy as pie." As someone who thinks about this stuff all the time, I actually used that and similar methods with my own sons. I sold my apartment using a second-price auction (netting much more than the realtor thought I would). Maybe I should write a book called "Using Incentives to Raise Your Kids, Sell Your Home, and ..." Nah. Something like that could never sell.
Posted by: M. Hodak at Oct 16, 2007 9:29:53 AM
Boo for using spectrum auctions as an example of a desirable outcome. The government is effectively creating an unnecessary monopoly in return for short-term revenue. Allowing shared, mostly unregulated use of spectrum (such as Wi-Fi) is a much better way to increase innovation, because it allows companies and other organizations too small to participate in these auctions to get into the game.
Posted by: Brian Slesinsky at Oct 16, 2007 12:27:00 PM
For more, see http://en.wikipedia.org/wiki/Open_spectrum
Posted by: Brian Slesinsky at Oct 16, 2007 12:28:04 PM
I found this take on the prize winners persuasive; but I note that others interpret them differently. For instance, Jim Johnson, Professor of Political Science, interprets their work as providing arguments for more politics, less markets. See this blogpost.
Posted by: Niclas Berggren at Oct 16, 2007 4:07:52 PM
Have we not returned to valuing observations that were begun by such works as "The Organization and Operation of the Roman Catholic Church in America" (Circa 1870 ?), sometimes cited as the origin of business management studies?
And, what would Adam Ferguson have commented?
Posted by: R. Richard Schweitzer at Oct 17, 2007 9:59:18 AM
Posted by: 鑽石 at Apr 2, 2008 10:44:05 PM
