Reading Group

CAASI FA 19 : Econ meets CS: Mechanism Design and Applications
The goal of this reading group is to learn (or review) together the economic approach to institutional design with an eye towards real world applications in human / public services and how computational approaches can help address the limitations of the economic approach. We plan to go deeply into very few readings (see below) that establish the theoretical framework of this Econ+CS approach and use this as a jumping off point to other reading as determined by the interest of the reading group. We will mostly work together on models and equations on the board to deepen our understanding, so you need to be comfortable with mathematical representations, but no previous knowledge in either economics or CS is expected.
Organizer: Sera Linardi and Jinyong Jeong
E-Mail: jinyong.jeong at pitt dot edu
Day/Time: Tuesday 11am-12pm
Location: Posvar Hall 3425 (Sera’s office) or 3412 (if we need more room).

Introduction: Mechanism design is “reverse game theory”: instead of starting with a game and solving for the outcome, we start from a desired outcome (for example, social welfare maximization) and design an institution / mechanism that would accomplish it. While this branch of economics has much practical / policy relevance, the methods of analysis is fairly abstract and results are restricted to certain environments. Computer science approaches, such as the focus on complexity and approximation and the use of simulations, provide a necessary bridge between mechanism design in theory and its implementation in practice. As examples of application we will also discuss Matching and Market Design, which is one of the most practical fields in Economics, with real world applications in school choice, organ exchange, doctor-hospital match, among many others.

Partial reading list (more to be added depending on group interest):

  • 9/3/2019: Sera Linardi: Intro
    Blume, L., Easley, D., Kleinberg, J., Kleinberg, R., & Tardos, É. (2015). Introduction to computer science and economic theory. Journal of Economic Theory, 156, 1-13. Link

  • 9/10/2019: Sera Linardi: Computational efficiency vs assumption on private values.
    Nisan, N. (2014). Algorithmic mechanism design (AMD) Link Section 2-4.2.

  • 9/17/2019:
    Lingfei Wu: AMD Section 4.3: Intractability, NP completeness
    Sera Linardi: AMD Section 4.4: Approximate optimality
    Jinyong Jeong: AMD Section 5: Payments, incentives, and mechanisms

  • 9/24/2019:
    Jinyong Jeong: continue AMD Section 5: Vickrey–Clarke–Groves (VCG) mechanism
    Rena Sung: Cason, T. N., Saijo, T., Sjöström, T., & Yamato, T. (2006). Secure implementation experiments: Do strategy-proof mechanisms really work?. Games and Economic Behavior, 57(2), 206-235.
    Extra: Operations Research Forum: debate on whether VCG is practical. Link

  • 9/31/2019:
    Sera Linardi: wrap up theoretical mechanism design discussion for now
    Lingfei Wu: Economic Complexity Index
    Hidalgo, C. A., Klinger, B., Barabási, A. L., & Hausmann, R. (2007). The product space conditions the development of nations. Science, 317(5837), 482-487.
    Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the national academy of sciences, 106(26), 10570-10575.
Reference book:

  • Börgers, T. (2015). An introduction to the theory of mechanism design. Oxford University Press, USA.
  • Sandholm, T. (2008). Computing in mechanism design. The New Palgrave Dictionary of Economics: Volume 1–8, 994-1002. Link