This year’s Economics Nobel was awarded for work on something called “Mechanism Design”.  I hadn’t heard of the term, but I realized that I knew something about the topic. Designing auctions is a fascinating exercise. Slight changes in rules can lead to drastic changes in outcomes.

Kishore Biyani, head of Big Bazaar, Pantaloons, etc. has a mechanism which can work only for him or someone like him.  When looking at a property to start his next shop, he gives the other guy one chance to quote the rent. If he likes the price, he takes it. If he does not, he walks away. Because everyone knows that there will be no second chance and because a Pantaloons or a Big Bazaar is a sought-after component of a mall, the counterparty has every incentive to quote the lowest possible rate.

I learnt this factoid in the fascinating, but badly written book “It happened in India”, which I picked up because it was available at a Big Bazaar checkout counter for 99 rupees.  Add that to my review queue.