The New Palgrave Dictionary of Economics Online

Computational issues are important in mechanism design, but have received insufficient research interest. This article briefly reviews some of the key ideas. I discuss computing by the centre, such as an auction server or vote aggregator, and computing by the agents, be they human or software. Limited computing hinders mechanism design in several ways, and presents deep strategic interactions between computing and incentives. On the bright side, novel algorithms and increasing computing power have enabled better mechanisms. Perhaps most interestingly, with computationally limited agents, one can implement mechanisms that would not be implementable among computationally unlimited agents.