Project description
Simplicity revisited to support the design of more practical market mechanisms
Simplicity plays a key role in market design. It lowers costs, reduces the impact of inequalities, encourages participation in markets and other institutions, and facilitates their evaluation. The EU-funded Simplicity project will address the following questions: What contracts and markets are simple? How can we compare the simplicity of contracts and markets? What are the trade-offs between simplicity and other objectives such as welfare, fairness, or revenue? The project’s further goals include developing a behaviourally grounded foundation for market design and practical ways to organise various markets and institutions, such as the assignment of scarce public resources and the sale of pollution permits and government securities.
Objective
Why are actual contracts and market mechanisms often simpler than our theoretical predictions? This is a central puzzle in microeconomics and, in many environments, it constrains our ability to rely on economic models. It raises further fundamental questions: What does it mean that a contract or a mechanism is simple? How to compare the simplicity of various contracts, mechanisms, and games? The proposed research program aims to address these questions and provide a new behaviorally- grounded foundation for market design, contract theory, and the analysis of simplicity. The program has three complementary parts: (i) to address the simplicity puzzle by developing a novel approach to contracting and mechanism design that takes into account perception errors; (ii) to operationalize what simplicity means and how various mechanisms, contracts, and games can be compared in terms of their simplicity; and (iii) to explore the trade-offs between simplicity and welfare-and-revenue criteria and to develop new practical market mechanisms for markets such as school choice, the assignment of medical transplants, and the auctions of commodities and government securities.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques.
- social scienceseconomics and businesseconomicsmicroeconomics
- natural sciencesmathematicsapplied mathematicsgame theory
- natural sciencesmathematicsapplied mathematicsmathematical model
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Programme(s)
Funding Scheme
ERC-COG - Consolidator GrantHost institution
8006 Zurich
Switzerland