Mechanism Design

This year's Nobel Prize went to a few guys that developed the economic theory of mechanism design. The principle deals with the challenge of "asymmetric information", which is what happens when the different parties in a situation have different information and levels of understanding. For instance, if I am selling you diamonds, you would be willing to pay more than the reasonable profit margins I as the dealer am willing to selling them for because you think diamonds are rare. I know they are not. Information asymmetry. Outcome that is not optimal for both parties. The Economist has a good story about the theory here.

I don't want to get into the mathematics, which coincidentally, I don't understand anyway. My interest lies in the translation to the economy that is the meeting room. It is very common that there are experts in a meeting that make for asymmetric information in a meeting. Many people feel that they are therefore entitled to the majority of the speaking time, and the greatest influence over decisions. Mechanism design, with it's intent to create the most effective outcome for all parties, may be a better alternative.

Trying to distribute information as much as possible is one approach to alleviating the asymmetry. Most important in this approach is absolute honesty. If an individual with a monopoly on knowledge in a certain area wishes to lead a meeting in a certain direction, then they may be less inclined to be totally transparent and disseminate all of their knowledge. Escpecially if their unique knowledge is something they are ashamed of.

How might a meeting designer or moderator incentivize people to park their own interests for the benefit of an optimal "mechanism designed" outcome?