Mechanism design is a branch of economics, social choice theory, and game theory that deals with designing games (or mechanisms) to implement a given social choice function. Because it starts at the end of the game (the optimal result) and then works backwards to find a game that implements it, it is sometimes called reverse game theory.[citation needed]
Mechanism design has broad applications, including traditional domains of economics such as market design, but also political science (through voting theory) and even networked systems (such as in inter-domain routing).[1]
Mechanism design studies solution concepts for a class of private-information games. Leonid Hurwicz explains that "in a design problem, the goal function is the main given, while the mechanism is the unknown. Therefore, the design problem is the inverse of traditional economic theory, which is typically devoted to the analysis of the performance of a given mechanism."[2]
The 2007 Nobel Memorial Prize in Economic Sciences was awarded to Leonid Hurwicz, Eric Maskin, and Roger Myerson "for having laid the foundations of mechanism design theory."[3] The related works of William Vickrey that established the field earned him the 1996 Nobel prize.
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