Managerial Mechanism Design Theory:The Concept and Framework with Applications in Emergency Management

Managerial Mechanism Design Theory:The Concept and Framework with Applications in Emergency Management

Mechanism design theory (MDT) which gained Nobel Prize in 2007 provides a formal way to mechanism design in Economics. It not only emphasizes on the phenomenon of modern economics, also gives an idea on the engineering side of economic theory, in particular, the implications for economic policy making. Despite the success of MDT in economics, it is difficultly migrated to management field. In managerial practices, especially emergent situation, people cannot make free choice and voluntary exchange due to the fact that some policies are sing-directed or half-compulsory. While the managerial mechanism is actively investigated for specific usages, a less studied issue is to study the unified framework of managerial mechanism which is of major importance to managers. This paper aims to provide a unified framework of managerial mechanism with an attempt to provide some insights into the fundamental of managerial mechanism design. Firstly, we discuss the difference between economical and managerial mechanism design from the perspectives of background, basic hypothesis, and weak obligation characteristic. Afterwards, we propose a unified framework of managerial mechanism design theory, composed of an order seven-tuple and some fundamental design modes. Lastly, we give a case study to show the applicability of the proposed mechanism design theory in emergency management.