AØKK08201U Mechanism Design

Volume 2024/2025

MSc programme in Economics – elective course


The PhD Programme in Economics at the Department of Economics:

  • The course is an elective course with research module. In order to register for the research module and to be able to write the research assignment, the PhD students must contact the study administration AND the lecturer.
  • The course is a part of the admission requirements for the 5+3 PhD Programme. Please consult the 5+3 PhD admission requirements.

This is a course about the economics of asymmetric information and ways to reveal it. How can a seller learn the buyers’ willingness to pay? How can a decision-maker ensure that an expert with a conflict of interest makes the best recommendation? How can a society decide whether a public project or a piece of legislation is worth implementing? When is simple communication enough and when are other tools needed, – and which tools could that be?

Where game theory explores how players act in a given environment, mechanism design takes a dual approach and asks instead how we should design the environment to induce the desirable behavior. Real-world applications include market design, organization of social choice and voting mechanisms, design of regulations and institutional design in general, and many others. The course introduces the students to both classic results and methods of mechanism design, and the bleeding-edge ideas from the research frontier.

Learning Outcome

After completing the course the student is expected to be able to:



  • Account for the fundamental ideas behind and approaches to mechanism design.
  • Define main trade-offs arising in information extraction problems.
  • Identify the limitations of existing approaches to mechanism design.
  • Explain and discuss key theoretical concepts from academic articles, as well as discuss their interpretation



  • Set up policy, trade, and management issues as mechanism design problems.
  • Propose mechanisms that induce the desired outcomes in various environments.
  • Analyze the drawbacks of existing institutions and suggest alternatives or identify reasons why none are available.



  • Apply the most relevant theoretical apparatus to analyze case-based problems.
  • Applicate reasoning by using the analytical framework of mechanism design in real-world institutions, proposed policies, and market strategies


Slides and lecture notes are the main source of material. Various papers and surveys will be referenced throughout the course that can be used as supplementary readings.

The following textbook (available online via library) can be used as an additional aid, but the students are not expected to buy it:

  • Narahari, Yadati. Game theory and mechanism design. Vol. 4. World Scientific, 2014.
The course is highly theoretical, relying on the students’ knowledge of basic mathematics and game theory tools.

The students are expected to have a good grasp on the material from the mathematics courses in the Bachelor program of Economics as "Mathematics A", "Mathematics B" and "Probability Theory and Statistics", and be able to solve maximization problems, work with probability distributions, calculate conditional expectations etc.

It is strongly recommended to have followed "Microeconomics III" at the Study of Economics, University of Copenhagen or a similar course, prior to taking this course. The students are expected to be familiar with Bayes-Nash Equilibrium and Perfect Bayesian Equilibrium solution concepts, and to be able to find equilibria in basic games of incomplete information with minimal guidance.

Having followed Advanced Game Theory could be helpful.
The course material is presented through a mix of classical lectures and recorded videos, supplemented by problem sets that are (partially) discussed in class.
3 hours of lectures every week from week 36 to 50 (except week 42).

The overall schema for the Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"

Timetable and venue:
To see the time and location of lectures please press the link under "Timetable"/​"Se skema" at the right side of this page (E means Autumn).

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E25; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn”
Press: “ View Timetable”

Please be aware:
- The schedule of the lectures and the exercise classes can change without the participants´ acceptance. If this occur, you can see the new schedule in your personal timetable at KUnet, in the app myUCPH and through the links in the right side of this course description and at the link above.
- It is the students´s own responsibility continuously throughout the study to stay informed about their study, their teaching, their schedule, their exams etc. through the curriculum of the study programme, the study pages at KUnet, student messages, the course description, the Digital Exam portal, Absalon, the personal schema at KUnet and myUCPH app etc.
  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 140
  • Exam
  • 24
  • Total
  • 206


The lecturer gives collective oral feedback during lectures, individual oral feedback upon request, and individual written feedback on the problem set.


Office hours: Tuesdays 14:00-15:00.

7,5 ECTS
Type of assessment
Written assignment, 12 hours
Type of assessment details
Individual take-home exam. It is not allowed to collaborate on the assignment with anyone.
The exam assignment is in English and must be answered in English.
Exam registration requirements

There are no requirements during the course that the student has to fulfill to be able to sit the exam.



All aids allowed at the written exams.


Use of AI tools is permitted. You must explain how you have used the tools. When text is solely or mainly generated by an AI tool, the tool used must be quoted as a source.


For further information about allowed aids for the re-examination, please go to the section "Re-exam".

Marking scale
7-point grading scale
Censorship form
No external censorship
Exam period


Exam information:

More information is available in Digital Exam from the middle of the semester. 

More information about examination, rules, aids etc. at Master (UK) and Master (DK).


Same as the ordinary exam. 


Reexam info:

More information is available in Digital Exam in February.

More info: Master(UK),Master(DK) 

Criteria for exam assesment

Students are assessed on the extent to which they master the learning outcome for the course.


In order to obtain the top grade "12", the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.


In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of  the knowledge, skills and competencies listed in the learning outcomes.