Information and Communication in Mechanism Design

The emergence of the Internet was the main trigger for the exploration of problems in the intersect ion of computer science and economics. Existing tools from the two disciplines were found to be insufficient for the design and analysis of these new environments, and a joint analysis of these fields appeared to be necessary. Examples for such new environments include large electronic commerce arenas, computerized stock markets, web search engines, Peer-to-Peer systems and web-based social networks. Mechanism Design is a mathematical theory that puts the foundations for constructing protocols for environments with selfish players. A mechanism is a protocol that determines the output and the monetary payments according to the players’ \messages” or \actions”. The mechanism aims to optimize some system-wise goal, although the preferences of the players may be in conflict with this goal.