Engineering Markets (?)

|Peter Boettke|

“Market Design is economic engineering and the science that supports it.” Al Roth

There is a lot to think about, and say, about all this from a Hayekian perspective. Indeed the Hayekian perspective explicitly rejects the engineering mentality in public policy, but it also explicitly endorses the good gardener metaphor for the policy maker. The right rules can cultivate (not design nor creat ex nihilo) a peaceful and prosperous order. As Roth says in his talk, game theory taught us how important the rules of the game we are playing are for the way the game is played. So when Roth is speaking of market design, is he talking about improving rules to cultivate better economic performance, or designing markets explicitly to engineer particular outputs? And finally, what does Roth’s take on engineering market design say about the older literature on mechanism design theory as an answer to the Mises-Hayek challenge to socialism based on calculation and dispersed knowledge?