Beyond Mechanism Design

The field of mechanism design is concerned with setting (incentives superimposed on) the utility functions of a group of players so as to induce desirable joint behavior of those players. It arose in the context of traditional equilibrium game theory applied to games involving human players. This has led it to have many implicit restrictions, which strongly limits its scope. In particular, it ignores many issues that are crucial for systems that are large (and therefore far off-equilibrium in general) and/or composed of non-human players (e.g., computer-based agents). This also means it has concentrated on issues that are often irrelevant in those broader domains (e.g., incentive compatibility). This paper illustrates these shortcomings by reviewing some of the recent theoretical work on the design of collectives, a body of work that constitutes a substantial broadening of mechanism design. It then presents computer experiments based on a recently suggested nanotechnology testbed that demonstrates the power of that extended version of mechanism design.