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Mechanism Theory
Matthew O. Jackson
Humanities and So cial Sciences 228-77, California Institute of Technology
Pasadena, California 91125, U.S.A.
Octob er 12, 2000, revised March 5, 2001
Forthcoming in The Encyclop edia of Life Supp ort Systems
Keywords: Mechanism, Mechanism Design, Dominant Strategy, Public Go o ds, Auc-
tion, Bargaining, Bayesian Equilibrium, Bayesian Incentive Compatibility, Revelation
Principle, Eciency, Individual Rationality, Balance, Strategy-Pro of, Direct Mecha-
nism, So cial Choice Function, Single-Peaked Preferences, Implementation.
Contents:
1. Intro duction
2. A General Mechanism Design Setting
3. Dominant Strategy Mechanism Design
3.1 Dominant Strategies
3.2 Direct Mechanisms and the Revelation Principle
3.3 The Gibbard-Satterthwaite Theorem
3.4 Single Peaked-Preferences and Other Restricted Domains
3.5 Groves Schemes
3.6 The Pivotal Mechanism and Vickrey Auctions
This survey is written to conform to the strict textb o ok-like style of the EOLSS. An addendum is
attached to this working pap er version with a more comprehensive bibliography and some bibliographic
notes. Some of the contents of this pap er are based on lectures Jackson gave at the CORE-Francqui
Summer Scho ol in May and June of 2000. He thanks the organizers Claude dAspremont, Michel
Le Breton and Heracles Polemarchakis, as well as CORE and the Francqui Foundation, and the
participants of the summer scho ol for their supp ort and feedback. He also thanks Ulrike Ervig and
Benny Moldovanu for comments on an earlier draft.
1
3.7 The Tension b etween Balance and Incentive Compatibility
3.8 Large Numb ers a
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