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This paper presents a model in which in each of a succession of time periods the State and the private economy interact to determine rules under which the private agents will operate in the next period, and rules and resources that constrain interventions of the State in the next period. The set of State institutions, called regulators, that are the instruments of State intervention is endogenously determined in each period. The model is a multiperiod game consisting of two phases. The first is a (noncooperative) game played by private economic agents in each period, the rules for which are given by the regulators in the preceding period. The second phase is political. In each period the private agents acting politically determine the legal and budgetary constraints under which the regulators will operate in the next period, and thereby determine the noncooperative game to be played in the next period. Formal entities in the model allow a wide variety of regulatory instruments and transfer payments to be represented.

Presents methods for designing institutions that direct and coordinate economic activity to achieve specified goals. These methods design informationally efficient mechanisms. The book uses mathematics, but is written so as to make the material accessible to economic theorists, applied economists and graduate students

A mechanism is a mathematical structure that models institutions through which economic activity is guided and coordinated. There are many such institutions; markets are the most familiar ones. Lawmakers, administrators and officers of private companies create institutions in order to achieve desired goals. They seek to do so in ways that economize on the resources needed to operate the institutions, and that provide incentives that induce the required behaviors. This book presents systematic procedures for designing mechanisms that achieve specified performance, and economize on the resources required to operate the mechanism. The systematic design procedures are algorithms for designing informationally efficient mechanisms. Most of the book deals with these procedures of design. When there are finitely many environments to be dealt with, and there is a Nash-implementing mechanism, our algorithms can be used to make that mechanism into an informationally efficient one. Informationally efficient dominant strategy implementation is also studied

Intro -- Contents -- Preface -- I. Introduction -- 1. Decentralization and Incentives -- 2. Incentive Compatibility since 1972 -- II. Informational Comparisons -- 3. Informational Requirements of Parametric Resource Allocation Processes -- 4. Price versus Direct Revelation: Informational Judgments for Finite Mechanisms -- III. Information and Stability -- 5. The Informational Requirements of Local Stability in Decentralized Allocation Mechanisms -- 6. On the Existence of a Locally Stable Dynamic Process with a Statically Minimal Message Space -- IV. Market Mechanisms -- 7. Technical Information, Returns to Scale, and the Existence of Competitive Equilibrium -- 8. Optimal Nonlinear Pricing with Two-Dimensional Characteristics -- 9. On the Second Welfare Theorem for Anonymous Net Trades in Exchange Economies with Many Agents -- V. Nonmarket and General Mechanisms -- 10. Incentive Compatible Approximation of a Nashlike Solution under Nonconvex Technology -- 11. Limited Communication and Incentive-Compatibility -- 12. Differential Information and Strategic Behavior in Economic Environments: A General Equilibrium Approach -- 13. Incentives, Information, and Iterative Planning -- 14. The Vulnerability to Manipulative Behavior of Resource Allocation Mechanisms Designed to Select Equitable and Efficient Outcomes -- Contributors.

If we are successfully to relate our work with the main body of Economic History, we must be able to show the fundamental relationship between quantitative analysis and more conventional methods of economic historians. The historian reconstructs events of the past, and with them attempts to understand the institutions and modes of behavior associated with those events. He seeks to construct a consistent story revealing the fundamental nature and meaning to us of the past, thus creating insight into the past and understanding of it—something considerably beyond a mere account of what probably happened. However, this story must be based upon, and be consistent with, the reconstructed events of the past, "what probably happened."