Incentive mechanism

Author: Shen Hai
Publisher:
Publish Date: 1999-03-01
Features: The phenomenon of information asymmetry is widespread in real-world economic life. For example, in transactions, buyers often do not know the true quality of goods, and in hiring, the qualifications of applicants are only clear to themselves. These phenomena lead to certain risks and uncertainties in decision-making processes, resulting in additional costs. How to eliminate or reduce these costs to coordinate and regulate people's behavior, especially how to make people tell the truth and how to make them keep their promises, is the problem that incentive theory studies. This book starts with common real-life examples such as repairing cars and taking taxis, distinguishing between hidden information and hidden characteristics, and presenting the topic of incentives—a highly theoretically and practically significant subject in modern economics—to readers. It specifically discusses topics such as forced retirement systems, partnership systems, price discrimination, auctions, voting, reputation, and finally explores incentives and their efficiency in resource allocation. The book is well-structured, easy to understand, and highly readable, making it a valuable reference for understanding the development of modern economics and comprehending real-world economic issues.