Which of the following is an example of mechanism design?
A) an employer pays all sales people a fixed salary
B) welfare reform that limits the amount of time a person can collect benefits
C) health insurance with zero co-pays
D) reduced prices on bulk purchases

Question

Quizplus · Accepted Answer

Mechanism design is a field in economics and game theory that seeks to design economic mechanisms or incentives, to achieve desired objectives, among participants with potentially conflicting interests, while taking into account the information available to them. Welfare reform that limits the amount of time a person can collect benefits is an example of mechanism design because it is designed to incentivize individuals to find employment within a certain timeframe, aligning individual behavior with broader economic or social goals.

Which of the Following Is an Example of Mechanism Design