Studies in Economic Design Jean-François Laslier Hervé Moulin M. Remzi Sanver William S. Zwicker Editors The Future of Economic Design The Continuing Development of a Field as Envisioned by Its Researchers Studies in Economic Design Series Editors Jean-François Laslier, CNRS - Paris School of Economics, Paris, France Hervé Moulin, Adam Smith Business School, University of Glasgow, Glasgow, UK M. Remzi Sanver, Université Paris-Dauphine, Paris, France William S. Zwicker, Department of Mathematics, Union College, Schenectady, NY, USA The book series Studies in Economic Design offers an outlet for scientific results from the study of economic, social and political institutions and mechanisms leading to the creative design of suitable legal-economic instruments. EconomicDesigncomprisesthecreativeartandscienceofinventing,analyzing and testing economic as well as social and political institutions and mechanisms aimed at achieving individual objectives and social goals. The accumulated traditions and wealth of knowledge in normative and positive economics and the strategicanalysisofGameTheoryareappliedwithnovelideasinthecreativetasks of designing and assembling diverse legal-economic instruments. These include constitutions and other assignments of rights, mechanisms for allocation or regulation, tax and incentive schemes, contract forms, voting and other choice aggregation procedures, markets, auctions, organizational forms such as partner- shipsandnetworks,togetherwithsupportingmembershipandotherpropertyrights, and information systems, including computational aspects. The series was initially started in 2002 and with its relaunch in 2017 seeks to incorporaterecentdevelopmentsinthefieldandhighlighttopicsforfutureresearch in Economic Design. More information about this series at http://www.springer.com/series/4734 ç é Jean-Fran ois Laslier Herv Moulin (cid:129) (cid:129) M. Remzi Sanver William S. Zwicker (cid:129) Editors The Future of Economic Design The Continuing Development of a Field as Envisioned by Its Researchers 123 Editors Jean-François Laslier HervéMoulin CNRS- Paris Schoolof Economics University of Glasgow Paris, France Glasgow, UK M.Remzi Sanver William S. Zwicker UniversitéParis-Dauphine UnionCollege UniversitéPSL, CNRS, LAMSADE Schenectady, NY,USA Paris, France ISSN 2510-3970 ISSN 2510-3989 (electronic) Studies in EconomicDesign ISBN978-3-030-18049-2 ISBN978-3-030-18050-8 (eBook) https://doi.org/10.1007/978-3-030-18050-8 ©SpringerNatureSwitzerlandAG2019 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfrom therelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained hereinorforanyerrorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregard tojurisdictionalclaimsinpublishedmapsandinstitutionalaffiliations. ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland To Murat R. Sertel Preface It was in 1999 that Murat R. Sertel wrote “Any modern account of the accom- plishments of economics would easily bear witness to huge footprints of progress made in the field of design” in a brilliant paper that gives an account of the developmentsineconomicdesign,togetherwithhisprofoundunderstandingofthe field.1 Twenty years later, we felt it would be useful to reconsider the field, regarding notonlywherewecomefromandwherewearebutalsowherewearegoingfrom here. Seventy-four papers collected in this volume are the result of a call that we extended in 2017 to colleagues from various generations: We are preparing a volume of short pieces tentatively titled The Future of Economic Design,andwethoughtofyouasapossiblecontributor.Hereiswhatwehaveinmind: Editedvolumesnormallycollectcompletedresearch,andifapapertalksaboutfuturework atall,itisinrelationtoitsparticularcontribution.Butininformal“cocktail”conversations manyofusengageinsweeping,high(orveryhigh)-levelassessmentsofourbroadresearch field:Wheredowecomefrom?Wheredowegofromhere?Wewouldnotrisksubmitting forreviewsuchdeeplyfeltbuthardtodemonstrateopinions,andyetourcolleaguesand studentsarekeentohearthemastheyconstructahigh-levelpictureoftheirownresearch. Thisvolumeaimstocollectalargenumberoftheseinformal,shortreflectionsonthe futureofeconomicdesign,ormechanismdesignbroadlyconstrued.Contributionswillbe ofafewpagesandnotcomprehensive.Theycouldfocusonhistorical,epistemological,or methodologicalaspectsofanytopicyouseeasrelatedtoeconomicdesign.Topicscovered include, inter alia, theoretical foundations and practical applications relevant to market design, constitutional design, implementation theory, voting, auctions, fair division, matching,scheduling,networkformation,lawandeconomics,etc.Anentrycouldbeofa rather technical nature, for instance explaining a result that you feel has much more potentialthanhasbeenrecognizedsofar,orcouldbeentirelynontechnical. 1Sertel, M. R. (1999), Introduction: Discoveries vs Inventions in Economics, in Contemporary Economic Issues Volume 4: Economic Behaviour and Design, edited by M.R. Sertel, Palgrave Macmillan. vii viii Preface Lookingbackattheseparagraphs,weseeseveralofourwishesbeingfulfilled:The reader will find in this volume a large number of contributions on a fireworks-like variety of topics and approaches, tackled by an impressive crowd of different authors. Anotherideawastohaveanoriginalpeerreviewprocessthattooktheformofa conversation using an online platform, where for three months all entries were visible to all contributors. The idea was to generate a flow of comments on the paperswiththegoalofimprovingratherthancensoringthem,becauseunsupported speculation and controversial views are the essence of this project. On that point, our wish only partially materialized: some contributions have sparked discussions and some have not, and it is not easy to detect any regularity or reason there. Takeninitsentirety,thecollectionclearlyreflectssomeofthemaintrendsofthe field: the never-ending question of the role of theory, the emergence of bounded rationality considerations, the influence of computer science and computer scien- tists,andthespreadingboundariesofthedisciplinetoencompassneighboringfields such as law, political science, and philosophy. Of course, the collection also demonstrates that scholars of economic design, whose daily bread and butter consists of more narrowly technical investigations, are quite willing to widen their reflection, as our call invited. It is hard, if it is even possible, to bring order to the splendiddiversity you will findhere.Theinterestedreadermightbebestservedbyglancingthroughtheentire volume.Nevertheless,wemadeanattempttoorganizethecontributionsintoeleven distinct themes: General Aspects, Aggregation and Voting, Algorithms and Complexity, Axiomatics, Behavioral Aspects, Fair Division, Implementation, Interpersonal Relations, Law, Matching and Markets, and New Technologies. Wewishtosincerelythankthemorethan80authorswhoacceptedthechallenge to show their view on the future of economic design in brief and concise contri- butions. We also express our gratitude to our editorial assistant Erhan Gümüş whose role was invaluable, and offer our enthusiastic thanks for his patience and attention to detail. Weweredeeply sorry tohear about thepassing ofDan Felsenthal,contributing author of this volume, on 20 February 2019. Dan was a staunch advocate of the majorityprinciple,whichhestudiedingreatdetail.Hisworkonvotingpowerwith Moshé Machover was a major factor in the re-awakening of that field. Moshé, to whomweaskedafewsentencesfollowingDan’spassing,writesthatDan“wasmy closerelative,friendandindispensableacademicpartner.HefirstledmeintoSocial Choiceandmycontributiontoit,forwhatit’sworth,wouldhavebeenunthinkable without his collaboration—contributing to our partnership his enormous creative energy, skill in calculation, forensic attention to detail and great insight.” This volume appears in the book series “Studies in Economic Design”. Four volumeshadappearedunderthisseries,beforeitpausedaftertheuntimelypassing of its editor Murat R. Sertel in 2003. A volume with contributions in memory of Preface ix Leonid Hurwicz, edited by Walter Trockel, is forthcoming in the series. We hope thatoureditedvolumewillbothcontributetoarevivaloftheseriesandstandonits own merit as an original contribution to the field of economic design. Paris, France Jean-François Laslier Glasgow, UK Hervé Moulin Paris, France M. Remzi Sanver Schenectady, USA William S. Zwicker Contents Part I General Aspects On the Future of Economic Design—The Personal Ruminations of a Matching Theorist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Szilvia Papai Principles of Economic Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Nicolaus Tideman The Future of Decision-Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Dorothea Baumeister Theoretical Unification, Domain Restrictions and Further Applications: Some Comments on Future Research in Economic Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Salvador Barberà Design for Weakly Structured Environments. . . . . . . . . . . . . . . . . . . . . 27 Gabriel Carroll Game of Trons: Normatrons and Positrons Contribute to Economic Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Roberto Serrano Reverting to Simplicity in Social Choice. . . . . . . . . . . . . . . . . . . . . . . . . 39 Nisarg Shah A Probabilistic Approach to Voting, Allocation, Matching, and Coalition Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Haris Aziz Collective Choice Lotteries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Felix Brandt xi