For over 30 years professional economic educators have been lamenting the economic illiteracy of the American populace while they have tried,unsuccessfully for the most part, to effect means of decreasing the gap between what people know and what they should know for effective citizenry. In fact it has been said that the American economy is the eighth wonder of the world and the ninth wonder is the ignorance of the American people.
This book, first published in 2006, examines the incentives at work in a wide range of institutions to see how and how well coordination is achieved by informing and motivating individual decision makers. The book examines the performance of agents hired to carry out specific tasks, from taxi drivers to CEOs. It investigates the performance of institutions, from voting schemes to kidney transplants, to see if they enhance general well being. The book examines a broad range of market transactions, from auctions to labor markets, to the entire economy. The analysis is conducted using specific worked examples, lucid general theory, and illustrations drawn from news stories. Of the seventy different topics and sections, only twelve require a knowledge of calculus. The second edition offers new chapters on auctions, matching and assignment problems, and corporate governance. Boxed examples are used to highlight points of theory and are separated from the main text.
