[Sequence announcement] Introduction to Mechanism Design

post by badger · 2014-04-30T16:21:31.652Z · score: 56 (56 votes) · LW · GW · Legacy · 12 comments

Mechanism design is the theory of how to construct institutions for strategic agents, spanning applications like voting systems, school admissions, regulation of monopolists, and auction design. Think of it as the engineering side of game theory, building algorithms for strategic agents. While it doesn't have much to say about rationality directly, mechanism design provides tools and results for anyone interested in world optimization.

In this sequence, I'll touch on

As the list above suggests, this sequence is going to be semi-technical, but my foremost goal is to convey the intuition behind these results. Since mechanism design builds on game theory, take a look at Yvain's Game Theory Intro if you want to brush up.

Various resources:

I plan on following up on this sequence with another focusing on group rationality and information aggregation, surveying scoring rules and prediction markets among other topics.

Suggestions and comments are very welcome.

12 comments

Comments sorted by top scores.

comment by Vulture · 2014-04-30T21:00:11.211Z · score: 5 (5 votes) · LW · GW

Ooh, this is exciting. Mechanism design has always struck me as something worth studying for aspiring world-optimizers, since it seems like it's sort of the key mindset/framework that would facilitate designing e.g. a government

comment by cousin_it · 2014-04-30T22:07:29.109Z · score: 4 (4 votes) · LW · GW

I can't wait to read this. The first post is already really good.

comment by MarkL · 2014-05-01T12:22:55.479Z · score: 3 (3 votes) · LW · GW

Anyone do "mechanism design" in their day job? What are jobs that have aspects of this? (Besides implicitly, like every web startup ever, which is still interesting to think about.)

comment by badger · 2014-05-01T13:17:15.750Z · score: 3 (3 votes) · LW · GW

Aside from academic economists and computer scientists? :D Auction design has been a big success story, enough so that microeconomic theorists like Hal Varian and Preston McAfee now work at Google full time. Microsoft and other tech companies also have research staff working specifically on mechanism design.

As far as people that should have some awareness (whether they do or not): anyone implementing an online reputation system, anyone allocating resources (like a university allocating courses to students or the US Army allocating ROTC graduates to its branches), or anyone designing government regulation.

comment by Lumifer · 2014-05-01T16:27:17.427Z · score: 1 (1 votes) · LW · GW

What are jobs that have aspects of this?

Management, especially high-level management. This basically what CEOs of large companies are supposed to do.

Politicians (and, by implications, lobbyists, consultants, think tanks, etc.).

comment by [deleted] · 2014-04-30T21:07:27.174Z · score: 3 (3 votes) · LW · GW

What type of information would be prerequisite to understanding this sequence?

comment by badger · 2014-04-30T21:58:24.559Z · score: 6 (6 votes) · LW · GW

Some exposure to game theory. Otherwise, tolerance of formulas and a little bit of calculus for optimization.

At least, I hope that's the case. I've been teaching this to economics grad students for the past few years, so I know common points of misunderstanding, but can easily take some jargon for granted. Please call me out on anything that is unclear.

comment by cursed · 2014-05-04T05:33:17.213Z · score: 1 (1 votes) · LW · GW

It'd be nice if you could go over why you think you'd be a good candidate to cover the subject.

comment by badger · 2014-05-05T23:33:52.815Z · score: 1 (1 votes) · LW · GW

I'm a PhD student working in this field and have TA'd multiple years for a graduate course covering this material.

comment by cursed · 2014-05-06T07:06:37.864Z · score: 0 (0 votes) · LW · GW

I'm convinced! Checked out your first post, good stuff so far.

comment by IlyaShpitser · 2014-05-01T12:14:24.047Z · score: 0 (0 votes) · LW · GW

I think that this is what we, as a civ, need to concentrate on if we are worried about inhuman unfriendly giants running around.

comment by asr · 2014-04-30T19:41:24.825Z · score: 0 (0 votes) · LW · GW

I would read this if written well.