Workshop 3: Multidimensional Mechanism Design

Date: July 16 - 18, 2009
Organizers: R. Müller (Maastricht), R. Vohra (Northwestern), A. Sen (ISI)
Venue: HIM lecture hall, Poppelsdorfer Allee 45

The 2007 Nobel memorial prize in economics honored a body of work, mechanism design, fundamental to the study of incentives and information. It is an analytical framework for thinking clearly and carefully about the most fundamental of social problems: what exactly can a given institution achieve when the information necessary to make decisions is dispersed and privately held? The range of questions to which the approach can be applied is wide. To achieve a given reduction in carbon emissions, should one rely on taxes or a cap and trade system? Is it better to sell an IPO via auction or the traditional bookbuilding approach? Would juries produce more informed decisions under a unanimity rule or simple majority? Mechanism design helps us understand how the answers to these questions depend on the details of the underlying environment. In turn this helps us to understand which details matter and which don’t.

Much of the prior work in mechanism design assumed that the private information held by agents could be summarized by a single number, i.e., was one dimensional. However, there are many natural environments where such an assumption is clearly limiting. For example, the allocation of heterogenous goods (like spectrum, distressed assets and employment opportunities). The classical approaches break down in such environments, and the insights they deliver do not apply. The Workshop on Multidimensional Mechanism Design sought to summarize recent progress made in this area.