Intuition
In an interesting class of Bayesian games, one player, called the “principal,” would like to condition his behavior on information privately known to other players. For example, the principal would like to know the true quality of a used car a salesman is pitching. He cannot learn anything simply by asking the salesman because it is in his interest to distort the truth. Fortunately, in mechanism design the principal does have one advantage. He may design a game whose rules can influence others to act the way he would like.
Absent mechanism design theory the principal's problem would be difficult to solve. He would have to consider all the possible games and choose the one that best influences other players' tactics. In addition the principal would have to draw conclusions from agents who may lie to him. Thanks to mechanism design, and particularly the revelation principle, the principal need only consider games in which agents truthfully report their private information.
Read more about this topic: Mechanism Design
Famous quotes containing the word intuition:
“Reason is sight. Instinct is touch. Intuition is smell.”
—Mason Cooley (b. 1927)
“All appeared new, and strange at first, inexpressibly rare and delightful and beautiful. I was a little stranger, which at my entrance into the world was saluted and surrounded with innumerable joys. My knowledge was divine. I knew by intuition those things which since my Apostasy, I collected again by the highest reason.”
—Thomas Traherne (1636–1674)
“When a scientist is ahead of his times, it is often through misunderstanding of current, rather than intuition of future truth. In science there is never any error so gross that it won’t one day, from some perspective, appear prophetic.”
—Jean Rostand (1894–1977)