Mechanism Design

This introductory course is intended for final year students. The Game Theory course offered in Year 3 is a prerequisite. Building on the mathematical modelling of interactions covered in that course, students now focus on designing mechanisms (the rules of the game) to ensure desired outcomes are achieved. Specifically, when rational and intelligent players participate, their utility is maximized when their actions align with the game designer's objectives.

Starting with a quick revision of the basic concepts of Game Theory and Utility Theory, we will introduce Mechanism Design with the help of Social Choice Functions. The stage will be set by defining what cannot be – with the help of the Gibbert-Satterthwaite Theorem and Arrow’s Impossibility Theorem. We will then study the golden standard of mechanism design – The VCG Mechanisms, and wrap the course with a detailed study of Auctions, the biggest money maker of this century.

By the end of this course, each student will have had the opportunity to:

• Understand and Analyse Mechanisms.
• Design rules for a basic Mechanism.

After completing this course, students should be able to

• Understand the rules of Mechanism Design | Know/Knowledge Outcome 
• Compare different Mechanisms | Analysis/Evaluate Outcome 
• Design Mechanisms for simple Games | Create/Synthesize Outcome 

• Game Theory and Mechanism Design – Y Narahari [IISc Press]
• Markets, Games, and Strategic Behavior – Charles A Holt Wright [Princeton].
• Game Theory, Alive – Anna Karlin, Yuval Peres [AMS].

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