Editing Market Design and Mechanism Design (section)

== <span style="color: #FFFFFF;">Remembering</span> ==
* '''Mechanism Design''' — The study of designing games or protocols to achieve a specific outcome.
* '''Market Design''' — The practical application of economic theory to create or improve specific markets.
* '''Incentive Compatibility''' — A property of a mechanism where the best strategy for a participant is to tell the truth.
* '''Revelation Principle''' — The mathematical theorem stating that any outcome can be achieved by a mechanism that encourages truthful reporting.
* '''Adverse Selection''' — A situation where one party has more information than another, leading to market failure (e.g., the "Lemons" problem in used cars).
* '''Moral Hazard''' — When one party takes more risks because another party bears the cost (e.g., insurance).
* '''Auction''' — A market mechanism for buying or selling items by offering them up for bid.
* '''Vickrey Auction''' — A sealed-bid auction where the highest bidder wins but pays the second-highest price (encourages truthful bidding).
* '''Stable Matching''' — An assignment where no two participants would both prefer each other over their current partners (Gale-Shapley algorithm).
* '''Externality''' — A cost or benefit that affects a third party who did not choose to incur it (e.g., pollution).
* '''Public Good''' — A good that is non-excludable and non-rivalrous (e.g., national defense).
* '''Information Asymmetry''' — When one party in a transaction has more or better information than the other.
* '''Pareto Efficiency''' — A state where no one can be made better off without making someone else worse off.
* '''Double Auction''' — A market where both buyers and sellers submit bids (e.g., a stock exchange).
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