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Regular version of the site
Master 2019/2020

## Mechanism Design

Category 'Best Course for Broadening Horizons and Diversity of Knowledge and Skills'
Area of studies: Economics
When: 2 year, 1 module
Mode of studies: offline
Instructors: Egor Ianovski
Master’s programme: Applied Economics and Mathematical Methods
Language: English
ECTS credits: 5

### Course Syllabus

#### Abstract

Mechanism design is a science of how to construct economic mechanisms (rules, environments, institutions) with desirable properties. While the usual microeconomic approach aims at understanding how agents behave in certain environments given certain rules, Mechanism design aims at finding "good" rules that lead to desirable outcomes. At the same time the rules themselves have to be simple and non-manipulable, i.e. provide incentives to participate sincerely. Mechanism design uses game theory tools and can be considered as its most applied part. The range of applications is very broad: from auctions and internet marketplaces to admission of young students to colleges, voting mechanisms, online dating services, and many others.

#### Learning Objectives

• overview of general methods used to design mechanisms in different areas of life

#### Expected Learning Outcomes

• Know types of games and solution concepts
• Understand the main concepts and properties of mechanism design
• Know standard auction forms and able to find optimal bidding functions
• Know Revenue Equivalence Theorem, its assumptions and applications
• Able to define and apply fair division, assignment, matching and voting mechanisms
• know properties of these mechanisms
• Able to identify deficiencies in real-life markets

#### Course Contents

• Introduction to voting. Basic voting rules and their properties.
• Independence of irrelevant alternatives and its relaxations. Arrow's impossibility theorem.
• VCG--mechanisms. Auctions.
• Matching and assignment mechanisms: dictatorships, core, serial, deferred, and immediate acceptance.
• Introduction to Computational social choice.
• Bargaining. Claims problem.

• test 1
• test 2
• test 3
• test 4
• exam

#### Interim Assessment

• Interim assessment (1 module)
0.6 * exam + 0.1 * test 1 + 0.1 * test 2 + 0.1 * test 3 + 0.1 * test 4

#### Recommended Core Bibliography

• Handbook of Computational Social Choice. (2016). Cambridge University Press. https://doi.org/10.1017/cbo9781107446984