Can you design the rules of a game so that people tell the truth?

Often you can, and the trick is to stop asking and start designing. Mechanism design studies how to construct rules, called mechanisms or institutions, that produce good outcomes even when the designer does not know the players' true preferences or what information they have. Because it starts with the end of the game, a particular result, and works backwards to find a game that implements it, it is sometimes called reverse game theory.

Take a buyer trying to learn the true quality of a used car. He cannot learn anything simply by asking the salesman, because it is in the salesman's interest to distort the truth. But he does have one advantage: he can design a game whose rules influence others to act the way he would like. That is the whole field in a sentence. Vickrey's second-price auction is the model case, where the rule that the winner pays the runner-up's bid makes bidding true value the best move.

The big theorem behind the idea is called the revelation principle. It says that if something can be achieved with a mechanism in which players have an incentive to lie, the same thing can be achieved by an honesty-promoting mechanism with the same equilibrium outcome. In other words, to search for good rules you may confine your search to games where telling the truth is each player's best move. The designer asks everyone for their true preferences, and then plays each player's optimal strategy for them, so lying never helps.

The field's great theorists were honoured in 2007, when Leonid Hurwicz, Eric Maskin and Roger Myerson shared the Nobel Memorial Prize in Economic Sciences for laying the foundations of mechanism design theory. Its tools now run parts of the internet, from network routing to advertisement auctions at Facebook and Google.