Application of Incentive-Compatible Mechanisms Design Theory (Self-adjusting, Effective/Efficient Mechanisms) in the Seventh National Development Planning

One of the obvious disadvantages and weaknesses of Iran’s national five-year development plans in achieving its goals is the lack or severe weakness of structures, institutions, and self-adjusting, effective/efficient motivational mechanisms (incentive compatibility) for decentralized agents. The mechanism design theory was proposed to solve this important issue and directly consider the internal economic motivations of agents in policies and development plans and has been widely used in recent decades. Mechanism design can be viewed as the art of designing the rules of a game to achieve a social desired outcome. In order to use mechanism design in planning and policy, first the socially desirable outcomes are determined by policymakers and central planners; then, the rules of the game are determined and guaranteed to create sufficient incentives for agents to perform actions and activities in line with the aforementioned goals or outcomes. In such an incentive-compatible environment, the decentralized agents "act almost as desired by the policymakers and planners", and in this way, the individual goals of the actors and the social goals of the policymakers and planners are simultaneously realized, and so are the objectives of development plans. Our results show that as long as the macro policies, goals, laws, and regulations desired by policymakers and central planners are not supported by the design and establishment of a self-adjusting, effective/efficient motivational mechanism for decentralized agents, there would be no guarantee for their proper implementation. Thus, the design, implementation, and practical use of this modern theory are of great necessity in the seventh development plan.