In the more formal research work on institutional design, game theory is an essential tool. Game theory analyzes markets and organizations from the following perspective. First, it identifies who are the important players. Next, it identifies the main choices these players can undertake and, finally, it identifies how the choices of these players interact to produce a final outcome that is evaluated in terms of the objectives of the players and a notion of consumer (or overall) welfare. Game theory takes the rules of the game that govern the interaction between the important players as exogenous.

From an institutional design perspective, the rules of the game are the key feature of interest. Given certain rules of the game, the players will (inter)act in a certain way, by changing these rules the behaviour changes and so will be the outcome. The institutional design question therefore is one where we ask which rules of the game produce the best (feasible) outcome evaluated from the perspective of either consumer or overall welfare.

This perspective is very general and can be applied to many different areas of interest, depending on the specialization of the researchers involved in the project. In this research laboratory we focus on several subjects, as these are the areas of expertise of the permanent researchers involved: consumer search, auctions and networks.

In the laboratory, we work together in a team of researchers, consisting of senior and junior professors, PhD students and master students. If you are interested in our work, or want to work with us, please contact dr. Alexei Parakhonyak.