Good day sir, What an amazing lecture. For the question asked if a banking union can be used in controlling leveraging of bank. Would it not be better to ask if a country's Centre Bank (Apex Bank) makes policies that regulate the activities of bank leveraging, this should be a better way to tackle such issues.
There is a slightly difficulty in what is taken as the overall system that the design mechanism is allegedly better; e.g. in the case of the family by passing the cutting of the cake to one child it may be efficient to the mum and to the one child but not the other; e.g. the cutting may not be value free as there may be a cake decoration that only has value for the other child if it is intact. Similarly with the radio wave auction solution 3 (i.e. paying the value of the second bidder may be more efficient for the bidders but not for the state). The state would prefer solution 2 just highest bidder where there is no 'discount' for the firm being honest in its bid. Of course the whole discipline is monumental and this is just 101 but the reason I'm leaving this comment is that mechanism design only works for goals involving monotonic distribution of actor preferences and most importantly in delineating the actors whose preferences are relevant. The biggest problems we have today is that preferences are not transparent, there is information asymmetry and special interests maintain it; which is why in the last 2000 years we didn't have a 'benevolent dictator' nor we managed to reach an environmental treaty of any substance (e.g. able to avert environmental disaster). So we have not solved climate change not because it is 'harder ' to enforce environmental regulation and agree new treaties at the international level but because special interest stop the application of existing mechanisms. For example within the US there is rampant pollution that could be stopped but justice, EPA... is looking the other way and internationally the WTO could ban imports, introduce fines... from countries, industries and so on that pollute the environment. That is, they are obtaining an unfair trade advantage by externalising production costs to the environment. However, WTO also looks the other way at the international level. Maskin and mechanism design divert attention from these real issues. So it is not that there is some academic work in progress that when completed will somehow give a solution. There are solutions today that special interests simply circumvent. This has been going on for thousands of year and humanity has been relatively good at stopping it. The problem is that humanity is running out of time. If we had another 3000 years maybe we could further reduce the information asymmetries to a point where climate change was averted. But we do not have another 3000 years; we are lucky if we have another 100 years before 'irreversible' damage gets caused.
What you say about the cake cutting is impossible. The child cutting the cake does not know the preferences of the other child so the cutting child's best strategy is to make both pieces of cake equal in value. Equal in value does not necessarily mean same size, it means that the child who cut the cake sees both pieces as equal. Now, the child who chooses the cake will pick the cake that he/she sees as more valuable and if he/she sees both as equal, then they'll pick randomly. This way, the total utility of the system - (Mother, Child1, Child2) is maximized.
Sharath Kumar: My point was that the one kid doing the cutting may see as equal value cutting the cake decoration in half. And for the other kid this has totally destroyed the value of the cake. The choice of the variable; namely value or size of the cake pieces the kid doing the cutting is (internally/locally) 'optimizing' for doesn't negate my point. The total utility would still be 1, 1, 0. The only way to escape this is to allow communication of preferences between the two children and so for example one may the decoration intact but a smaller piece and the other kid gets a few more cherries and a bigger piece.
@@dimitristsagdis7340 okay, let's take up your example with two kids A and B. A sees more value in the decorated part of the cake so cuts it as 3/4 plain part and 1/4 piece which has the decorated part. Suppose B sees more value in the size of the cake. B will obviously pick the bigger half without the decoration thus getting maximum utility. It doesn't make a difference to A which slice B picks cause A has to divide both slices equally in terms of value for this to work out for him. You can do the rest of the example for if B saw more value in decoration. either way A is getting the maximum value that A can and B is getting the maximum value that B can.
Sharath Kumar: You are right in that the 'cut' you propose by kid A; namely: larger piece without the decoration vs. smaller pieces with the decoration intact is lets say (for argument's sake) of equal value and this solution (i.e. mum delegating cut to kid A and first choice to kid B) /cut maximises the value for the 3 actors. So I think you are getting the point of my initial comment (2 months ago) that "the cutting may not be value free". Because an alternative cut (e.g. splitting the cake and thus the decoration in the middle) although 'equal' is not of equal value to the two kids and does not result to what you said initially as "the total utility of the system - (Mother, Child1, Child2) is maximized" . So kid A needs to have some information from the outside in order to perform a value-full (as opposed to value-free) cut in order to maximize the total utility of the system.
Incredible talk!
Good day sir, What an amazing lecture. For the question asked if a banking union can be used in controlling leveraging of bank. Would it not be better to ask if a country's Centre Bank (Apex Bank) makes policies that regulate the activities of bank leveraging, this should be a better way to tackle such issues.
which paper is he talking about at min 38:46 ?
There is a slightly difficulty in what is taken as the overall system that the design mechanism is allegedly better; e.g. in the case of the family by passing the cutting of the cake to one child it may be efficient to the mum and to the one child but not the other; e.g. the cutting may not be value free as there may be a cake decoration that only has value for the other child if it is intact. Similarly with the radio wave auction solution 3 (i.e. paying the value of the second bidder may be more efficient for the bidders but not for the state). The state would prefer solution 2 just highest bidder where there is no 'discount' for the firm being honest in its bid. Of course the whole discipline is monumental and this is just 101 but the reason I'm leaving this comment is that mechanism design only works for goals involving monotonic distribution of actor preferences and most importantly in delineating the actors whose preferences are relevant. The biggest problems we have today is that preferences are not transparent, there is information asymmetry and special interests maintain it; which is why in the last 2000 years we didn't have a 'benevolent dictator' nor we managed to reach an environmental treaty of any substance (e.g. able to avert environmental disaster). So we have not solved climate change not because it is 'harder ' to enforce environmental regulation and agree new treaties at the international level but because special interest stop the application of existing mechanisms. For example within the US there is rampant pollution that could be stopped but justice, EPA... is looking the other way and internationally the WTO could ban imports, introduce fines... from countries, industries and so on that pollute the environment. That is, they are obtaining an unfair trade advantage by externalising production costs to the environment. However, WTO also looks the other way at the international level. Maskin and mechanism design divert attention from these real issues. So it is not that there is some academic work in progress that when completed will somehow give a solution. There are solutions today that special interests simply circumvent. This has been going on for thousands of year and humanity has been relatively good at stopping it. The problem is that humanity is running out of time. If we had another 3000 years maybe we could further reduce the information asymmetries to a point where climate change was averted. But we do not have another 3000 years; we are lucky if we have another 100 years before 'irreversible' damage gets caused.
Bruh nobody's gonna waste their time reading this
What you say about the cake cutting is impossible. The child cutting the cake does not know the preferences of the other child so the cutting child's best strategy is to make both pieces of cake equal in value. Equal in value does not necessarily mean same size, it means that the child who cut the cake sees both pieces as equal. Now, the child who chooses the cake will pick the cake that he/she sees as more valuable and if he/she sees both as equal, then they'll pick randomly. This way, the total utility of the system - (Mother, Child1, Child2) is maximized.
Sharath Kumar: My point was that the one kid doing the cutting may see as equal value cutting the cake decoration in half. And for the other kid this has totally destroyed the value of the cake. The choice of the variable; namely value or size of the cake pieces the kid doing the cutting is (internally/locally) 'optimizing' for doesn't negate my point. The total utility would still be 1, 1, 0. The only way to escape this is to allow communication of preferences between the two children and so for example one may the decoration intact but a smaller piece and the other kid gets a few more cherries and a bigger piece.
@@dimitristsagdis7340 okay, let's take up your example with two kids A and B. A sees more value in the decorated part of the cake so cuts it as 3/4 plain part and 1/4 piece which has the decorated part.
Suppose B sees more value in the size of the cake. B will obviously pick the bigger half without the decoration thus getting maximum utility. It doesn't make a difference to A which slice B picks cause A has to divide both slices equally in terms of value for this to work out for him.
You can do the rest of the example for if B saw more value in decoration. either way A is getting the maximum value that A can and B is getting the maximum value that B can.
Sharath Kumar: You are right in that the 'cut' you propose by kid A; namely: larger piece without the decoration vs. smaller pieces with the decoration intact is lets say (for argument's sake) of equal value and this solution (i.e. mum delegating cut to kid A and first choice to kid B) /cut maximises the value for the 3 actors. So I think you are getting the point of my initial comment (2 months ago) that "the cutting may not be value free". Because an alternative cut (e.g. splitting the cake and thus the decoration in the middle) although 'equal' is not of equal value to the two kids and does not result to what you said initially as "the total utility of the system - (Mother, Child1, Child2) is maximized" . So kid A needs to have some information from the outside in order to perform a value-full (as opposed to value-free) cut in order to maximize the total utility of the system.
can you make it simple...!
where 6 years old understand it ...!
Refer to your local school to learn simple algebra and from then on build up to mechanism design. By then you should be about 20~30 years old.
Sorry you have to be at least 7 to understand it