Perspectives on Mechanism Design in Economic Theory

摘要

Mechanism design has extended the scope of economic analysis by adding incentive constraints to resource constraints in our definition of the economic problem. Incentive constraints provide an analytical framework for understanding failures of allocative efficiency, showing how such failures may depend on the initial allocation of property rights in a society. But mechanism-design theory changes the basic object of analysis from the resource allocation to the social plan or allocation mechanism that specifies how resource allocations should depend on people's information. Concepts of incentive efficiency can be applied to identify good institutional rules or mechanisms, taking incentive constraints into account.rnThe cases for collectivism or private ownership may depend on trade-offs between different kinds of incentive problems: moral hazard and adverse selection. Moral-hazard incentive problems particularly are fundamental in any institution, because institutional rules are enforced by actions of leaders and officials, who must be motivated by an expectation of rewards and privileges as long as they fulfill their institutional responsibilities (see Hurwicz 2007; Myerson 2007, 2008).