Market Design by Public Authorities
Market Design by Public Authorities
This project aims to advance the understanding of market design in the presence of political constraints such as re-election motives as well as corruption and favoritism. We will study how corrupt market designers or politicians motivated by re-election concerns may favor certain types of market rules or market organizations, and we will also consider the possibility that market designers or politicians interfere in markets to pursue their own personal objectives. We will ask how the outcomes of existing markets designed by public authorities can be explained by modeling policy makers as players of the game and by incorporating behavioral components. Thus, we will apply insights from the political economy literature and from behavioral economics regarding corruption and dishonesty to market design. Ultimately this leads to the policy question of how the incentives of public agents and politicians and the rules that they have to follow can be adjusted to maximize welfare.
