Mechanism Design is the theory of how to design incentives for strategic agents, such that the agents acting according to their selfish interests will result in a desired outcome. It can be applied to things like institution design, voting systems, school admissions, regulation of monopolists, market design, and auction design. Think of it as the engineering side of game theory, thinking backward from a desired goal, and designing structures that lead strategic agents to behave in a way that achieves that goal.

Important Concepts

Incentive Compatibility: Wikipedia, LessWrong
Revelation Principle: Wikipedia, LessWrong

Related Pages: Game Theory, Incentives, Principal-Agent Problems, Cryptocurrencies and blockchain, Public discourse

Related Sequences: Mechanism Design