Incentive-Centered Design Curriculum

We are developing a curriculum "cluster" related to Incentive Centered Design. The curriculum will be structured into 1.5 credit modules. Some or all will be embedded within existing 3-credit courses, but eventually we hope that students will be able to sign up for individual modules as courses.

Students who complete all 7 modules would receive some kind of recognition (piece of paper) from SI, but it would not be an official Rackham "certificate". There will be no official designation on the student's diploma.

Please note that we are still in start-up mode in the 2006-2007 school year. Students who participate this year will have the benefit of additional faculty attention as we work things out, but will have to put up with the ambiguities, disorganization, and changes that are bound to occur in this start-up endeavor.

The faculty are excited about the intellectual content of this area and we are excited about the potential impact incentive engineering can have in the world. We're also excited because we anticipate learning a lot: we don't know all the content yet and we don't know yet exactly how to organize things so that theory can make a difference in practice. Come join the fun! Come join the learning!

Faculty involved

(Names listed are those participating in curriculum design and teaching. If you want to be included, please add your name!)

• Yan Chen Associate Professor
• Jeffrey K. MacKie-Mason Arthur W. Burks Collegiate Professor of Information and Computer Science
• Paul Resnick Professor
• Rahul Sami Assistant Professor

Course Modules

1. Game Theory. This module is a pre-requisite for several of the others.
   • Next offered: Fall 2007, as second half of 625, Fundamentals of Microeconomics.
   • Instructor: Yan Chen
2. Public Information Goods. This course module will cover economic and psychological theories of what motivates contribution to public information goods, with some interesting applications such as open source software, social bookmarking, P2P.
   • Next offered: Fall 2007, in same time slot as Matching Mechanisms course, other half of the semester.
   • Instructor: Yan Chen
3. Matching Mechanisms. Matching is the allocation of indivisible items to people. Traditionally a topic in operations research, it is now a frontier research area in economic design where, unlike OR, agent incentives are explicitly modeled and analyzed.
   • Examples: National residence matching, house allocation, school choice, kidney exchange.
   • Next offered: New course; Fall 2007, in same time slot as Public Information Goods course, other half of the semester.
   • Instructor: Yan Chen
4. Auction Mechanisms. Traditionally, auctions are used to allocate goods when the market is thin (few buyers and sellers) and prices are not clearly transparent.
   • Examples: various online auction mechanisms and the optimal strategies for each mechanism, e.g., eBay and amazon auctions (soft vs. hard closing rules), priceline, combinatorial auctions for scheduling.
   • Next offered: Winter 2007, as part of 652, Electronic Commerce. Remainder of course covers other material, including payment systems.
   • Instructor: Rahul Sami (Mike Wellman has taught in past and may teach again).
5. Reputation Systems. A reputation system gives people information about others' past performance. It can enhance an on-line interaction environment by helping people decide who to trust, encouraging people to be more trustworthy, and discouraging those who are not trustworthy from participating. This course will cover theoretical and practical issues related to reputation systems.
   • Next offered: Winter 2007. (See related course SI583, Recommender Systems, offered Fall 2006).
   • Instructor: Rahul Sami
6. SI 583: Recommender Systems. Recommender systems guide people to interesting materials based on information from other people. There is a large design space of alternative ways to organize such systems. The information that other people provide may come from explicit ratings, tags, or reviews, or implicitly from how they spend their time or money. The information can be aggregated and used to select, filter, sort, or highlight items. The recommendations may be personalized to the preferences of different users.
   • Next offered: Fall 2007.
   • Instructor: Paul Resnick
7. Information Aggregation and Prediction Markets. This course module will cover issues in aggregating information from distributed information holders with a view to coming up with a forecast. Prediction markets (also called Information Markets) are rapidly being deployed to effectively aggregate information to forecast election outcomes, box office results, product ship dates, and many other events.
   • Next offered: Fall 2006.
   • Instructor: Rahul Sami ( in other years: Paul Resnick, Jeff MacKie-Mason, and/or Yan Chen)
8. Contracts and Moral Hazard. This course module will cover the economics of incomplete information, including signaling and principal-agent theory, with application to the design of incentive contracts.
   • Next offered: Winter 2007, as part of 646, Information Economics (syllabus). (The other half of the course will cover the economics of information goods, including the economics of intellectual property and the pricing and packaging of information goods.)
   • Instructor: Jeff Mackie-Mason

-- PaulResnick - Last updated 30 Oct 2006
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