Center for Engineering Social and Economic Institutions (ESEI)

The research center “Engineering Social and Economic Institutions” (ESEI) hosted by the Chair for Organizational Design studies the design and creation of improved social and economic institutions using an approach that combines theory, laboratory experiments, and practical policy. The focus at ESEI is to solve major open design problems and to gain an improved understanding of new mechanisms for auctions, trading, matching, voting, social learning and networking. The aim is to advance our scientific knowledge and to provide practitioners with implementations that have been thoroughly tested in the laboratory. A large body of experimental research has uncovered empirical regularities not predicted by theory, creating a central role for “wind tunnel” testing of alternative institutions. The combination of mechanism design and wind tunnel testing defines our “engineering” approach to the design of better social and economic institutions.

Current projects include how to improve auctions and markets in the presence of demand complementarities, how communication can improve group decision making and alleviate moral hazard and adverse selection problems, how to sell products with deadlines such as airline tickets and how costless signaling can improve matching in labor markets. The research conducted at ESEI has an important policy component and has influenced the design of major spectrum auctions and markets for greenhouse gas pollution permits in Australia, Europe, and the US.