Mechanism Design

Mechanism design is the engineering of incentives to drive participants in a game towards an optimal outcome. Presuming their actions will be self-interested and they lack complete information for making their decisions.

It can be thought of as reverse game theory. Since the objective is known and a designer is tasked with building a mechanism resulting in the achievement of the objective.

This mechanism is usually a combination of incentives resulting in players in a game revealing their private information. The optimal outcome of a game is usually dependent on the revelation of information that would stay hidden absent incentives for participants’ to reveal it.

The incentives typically involve rewards for players willing to reveal valuable private information with money often rewarded as a direct incentive.

Further Reading Mechanism Design

What is mechanism design and why does it matter?