Incentive Compatibility
A core concept in mechanism design, referring to the property that the designed rules make participants' behaviour, when they maximize their own interests, coincide exactly with the socially optimal objective.
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The Vickrey auction (second-price sealed-bid auction) was proposed by economist William Vickrey, and its core property is incentive compatibility: each bidder's dominant strategy is to truthfully report its true valuation.
The core of regulatory intervention is to design a set of rules such that, while each participant pursues its own profit maximization, its behavior exactly conforms to the social optimum, that is, satisfies incentive compatibility.
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The Vickrey auction (second-price sealed-bid auction) was proposed by economist William Vickrey, and its core property is incentive compatibility: each bidder's dominant strategy is to truthfully report its true valuation.
50%UnverifiedThe core of regulatory intervention is to design a set of rules such that, while each participant pursues its own profit maximization, its behavior exactly conforms to the social optimum, that is, satisfies incentive compatibility.
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