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August 02, 2006

Placeholder: ICD isn't perfect, but...

Fact is, incentive-centered designs in general won't be "perfect", but that's not a fundamental flaw: solutions to any interesting humanoid problem generally won't be "perfect".

What's really nice is that ICD happens to have a clear and useful way of explaining most solutions can't be perfect. Here's the brief version: when private information is valuable, and its asymmetric distribution is costly to social welfare, it is generally necessary to "pay" or provide incentives to the information owner to share it or behave in a way that reveals it: we want the information get improve social outcomes, but it costs something to get it.

I plan to write a longer entry on this fundamental issue later.

Posted by jmm at August 2, 2006 12:48 AM

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