What concept did Hurwicz originate?
Incentive Compatibility
Evolution Theory
Quantum Mechanics
Natural Selection
Answer
Incentive compatibility refers to the design of mechanisms or systems in which participants' self-interested actions align with the desired overall outcome. It addresses situations where individuals have private information and may have incentives to misrepresent it. Hurwicz's contributions include the development of mechanisms that ensure truth-telling and promoting cooperation in scenarios where misaligned incentives exist, thereby enhancing the reliability and efficiency of decision-making processes.
The Legacy of Leonid Hurwicz: Mastermind of Economics and Mathematics
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