AØKK08201U Mechanism Design
MSc programme in Economics – elective course
The PhD Programme in Economics at the Department of Economics:
- The course is an elective course with resarch module. PhD students must contact the study administration and the lecturer in order to write the research assignment.
- The course is a part of the admission requirements for the 5+3 PhD Programme. Please consult the 5+3 PhD admission requirements.
The teaching in this course may be changed to be taught either fully or partly online due to COVID-19. For further information, see the course room on Absalon. The time, place and type of assessment used for the exam may also be changed due to COVID-19, and any further information will be announced under the panel “Exam”.
Mechanism design explores institutions in environments with asymmetric information. While 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, among others, market design, organization of social choice and voting mechanisms, design of regulations and institutional design in general.
The course can roughly be split in two parts:
- Part 1 introduces the students to the classic results and methods of mechanism design. We introduce classical mechanisms and discuss their strengths and weaknesses. We then look at mechanisms that are optimal in some special cases, such as trade, social choice, and matching problems.
- Part 2 explores the world beyond the models described in the first part. In particular, we look at cases when agents' information is correlated, at mechanism design in dynamic settings, at mechanism design without money, and conclude with information design.
The course is based on selected chapters from the textbooks by Börgers, and by Roth and Sotomayor, as well as on recent surveys.
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.
- Use the analytical framework of mechanism design in discussions of the real-world institutions, proposed policies, and market strategies.
- Börgers, Tilman. An introduction to the theory of mechanism design. Oxford University Press, 2015.
- Roth, A., & Sotomayor, M. (1990). Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis (Econometric Society Monographs). Cambridge: Cambridge University Press. doi:10.1017/CCOL052139015X (Selected chapters.)
- Bergemann, D., & Välimäki, J. (2019). Dynamic Mechanism Design: An Introduction. Journal of Economic Literature, 57 (2): 235-74. doi: 10.1257/jel.20180892
- Bergemann, D., & Morris, S. (2019). Information Design: A Unified Perspective. Journal of Economic Literature, 57 (1): 44-95. doi: 10.1257/jel.20181489
Mastering the material from the mathematics courses in the Bachelor program (Mathematics A and B) is very helpful.
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-E20; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”
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.
For foreign students not enrolled: Admission requirements, registration etc: Study Economics.
For gæste- og enkelfagsstuderende: Tilmelding og information via Uddannelse i Økonomi.
- 7,5 ECTS
- Type of assessment
- Written assignment, 24 hoursindividual 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
To qualify for the exam the student must during the semester and not later than the given deadline:
- hand in one mandatory assignment. Satisfactory performance on the assignment is required to have the assignment approved.
Collaboration is allowed on the assignment. Submissions are accepted from groups of up to three students. Please be aware that the plagiarism rules must be complied.
- All aids allowed
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
- Exam period
The exam takes place:
From 13 January 2021 at 10.00 AM to 14 January 2021 at 10.00 AM
In special cases, the exam date can be changed to another day and time within the exam period.
The reexam takes place:
From 13 February 2021 at 10.00 AM to 14 February 2021 at 10.00 AM
If only few students register for the written re-exam, the re-exam might change to a 20 minutes online oral examination with aids, but without preparation time.
If changed to an oral re-exam, the date and time might change as well. The Examination's Office informs the students by KU e-mail.
Information about the reexam will be available in the Digital Exam early February.
Criteria for exam assesment
Students are assessed on the extent to which they master the learning outcome for the course.
To receive the top grade, 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.