Book contents
- Frontmatter
- Contents
- Preface
- Chapter 1 Introduction
- Chapter 2 Performance criteria
- Chapter 3 The Arrow–Debreu world
- Chapter 4 Uncertainty
- Chapter 5 Incentive compatibility
- Chapter 6 Existence of a competitive equilibrium
- Chapter 7 Welfare properties of the Walrasian mechanism
- Appendix 1 Elements of consumer choice
- Appendix 2 The Edgeworth exchange economy
- Appendix 3 Proof of the Shafer–Sonnenschein theorem
- References
- Author index
- Subject index
Preface
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Preface
- Chapter 1 Introduction
- Chapter 2 Performance criteria
- Chapter 3 The Arrow–Debreu world
- Chapter 4 Uncertainty
- Chapter 5 Incentive compatibility
- Chapter 6 Existence of a competitive equilibrium
- Chapter 7 Welfare properties of the Walrasian mechanism
- Appendix 1 Elements of consumer choice
- Appendix 2 The Edgeworth exchange economy
- Appendix 3 Proof of the Shafer–Sonnenschein theorem
- References
- Author index
- Subject index
Summary
This book was inspired by my economic theory lectures to first-year Ph.D. students at the University of Toronto. The point d'appui is that any economic system or mechanism is essentially a communication process. Each agent transmits messages to which other agents respond as self-interest dictates. A successful mechanism must harness this self-interest so that each agent, without necessarily understanding the overall process, is induced to cooperate in the determination of a satisfactory (or optimal) menu of goods and services. Adam Smith, of course, is the founder of this approach to the study of economics. This book employs the formal, and abstract, general equilibrium model of resource allocation pioneered by the nineteenth-century economist Léon Walras. Its modern formulation was developed over the last three decades, particularly by Professors K. J. Arrow, G. Debreu, L. Hurwicz, and R. Radner.
Our “mechanism design” approach to economic theory begins with the tacit supposition that the author and the reader have met to design a resource allocation mechanism that will deliver a satisfactory menu of goods and services. Nothing is taken for granted and the designers are not necessarily committed to the existing institutions. As a result, any theorem that does point to a particular system, say, to the private ownership market economy, will have that much more cogency.
The mechanism approach brings into prominence the issue of the criteria by which the performance of an economic system is to be judged, particularly those criteria relating to the interplay between individual incentives and individual messages.
- Type
- Chapter
- Information
- Resource Allocation Mechanisms , pp. xi - xivPublisher: Cambridge University PressPrint publication year: 1987