The Nobel prize this year went to three theorists in the area of mechanism design. This is the best explanation I have found for the beginning economics student to help them understand just what that is.
Essentially, the idea is coming up with ways in which to make markets work more efficiently to produce the optimal outcome, which is at the heart of the field. Every market needs rules, and mechanism design is essential to producing those outcomes in a wide variety of markets. Ebay, a Morroccan Bazzar and the New York Stock Exchange are all markets, and those markets all have their unique rules.
There is also application to the political arena, and we will discuss this in class.
10 comments:
I think this comic is funny. You think I could get away with that with my boss.
It sad that the only way you can do good if someone does bad. Kind of reminds me of a yin yang.
They should make it in to a movie I would watch it. I also so a "Beautiful Mind" it was a good movie.
Mechanism design deserves the nobel prize. If it will lead to exchanges that allow both sides to prosper, our economy will recieve a great boost. It will take some time to set this motion since, as the article stated, no one really wants to give up any information. If the incentives mentioned in the article can be inreased to give people a reason to give up their information, then perhaps the mechanism design can be pulled off.
Too bad neatly no one could or would say that to their boss without serious consequences.
It's funny that no one has really heard of the theme that won the nobel prize award in economics. It makes sense that something that something that "goes to the heart of one of the biggest challenges in economics." It's great that economists are focusing on something that shapes the entire economy, not just just something that affects a small area of it.
Thinking back on NAKED ECONOMICS ( idk how to italicize on here), I recall something about asymmetry of information. And if I recall correctly, it seemed sorta obvious that ideally we would want everyone to share their information equally and eliminate the whole problem. This in itself does not seem deserving of a Nobel prize...but the article mentions something about Mr. Hurwicz figuring out a way to make this possible. To me, this sounds FAR more important than using math to tell us something we already know. I would have liked if the article for fully explained how to eliminate information asymmetry( I am assuming I read it correctly, and this is in fact what Mr. Hurwicz discovered...).
i think this is a pretty great idea. although i wonder what will happen once everyone in the world is "winning" the game b/c everyone is better off with no one coming off the worse. but it is absolutely true that people are going to lie and cheat if it means saving hard earned money, which is going to lead to incorrect data wich can throw off economic guestimates. i'd like to know more about this solution.
Mechanism Design is a great idea. It demonstrates how people can share their information equally with the government. However not everyone is willing to give up their information that easily but with incentives maybe that will put people in the position to do so
Hurwicz's "incentive compatibility"
might actually work for america
the commic pretty much summarized in one nice, funny strip what the article explainted monotinously, or "monotoistically," to quote directly. These nobel winners are pretty much creating equations to solve a problem that could be solved so simply if everyone just worked together, damn it! I mean, i give the old guy (reaaaallly old) credit for spending so much time and effort on trying to lend a hand to the invisible hand, but i cant help but feel that hea and his colleagues are removed from the reality of the market and of psychological behavior. I don't know, if i were trying to manipulate the economy i would study people, not equations...
but as i said, the comic was so funny and so true:)
the commic pretty much summarized in one nice, funny strip what the article explainted monotinously, or "monotoistically," to quote directly. These nobel winners are pretty much creating equations to solve a problem that could be solved so simply if everyone just worked together, damn it! I mean, i give the old guy (reaaaallly old) credit for spending so much time and effort on trying to lend a hand to the invisible hand, but i cant help but feel that hea and his colleagues are removed from the reality of the market and of psychological behavior. I don't know, if i were trying to manipulate the economy i would study people, not equations...
but as i said, the comic was so funny and so true:)
I enjoyed the comic it had a great concept.. I think this is the way many bosses think.
I think that Mechanism Design is a great idea, however it could definitly lead to corruption. People will do whatever it takes to save thier money, thus leading to incorrect data.
I dont think that everyone will give eachother all the correct data without something for it. Again i think that people would only want to save their money in the long run not help everyone else. i believe if everyone plays their part this will help boost the economy but i dont think it will happen.
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