The mechanism design theory founded by Hurwicz is the inheritance and development of neoclassical economics. Hurwicz’s research did not deviate from Eggertsson’s statement of the hard core of neoclassical economics, but there were new developments in the theoretical framework and research methods by Hurwicz. On the one hand, he broke the old thinking framework that regarded system and mechanism as exogenous and nonadjustable variables. He introduced mechanism design into economic analysis, which deepened the understanding of the essence, change and choice of institution. On the other hand, he introduced game theory, a tool of mathematical analysis, into the study of market economy theory, especially the process of economic exchange and the theory of economic resource allocation. Although the core of game theory is still the utility maximization of rational economic man based on individual standard advocated by neoclassical economics, it also reveals the potential damage to the overall utility caused by the promotion of individual rationality lacking the spirit of cooperation. The economic theory innovation of Hurwicz is of great practical significance to the innovation and development of economics in China and the deepening of the market-oriented reform and opening-up in the new era.This paper provides the following conclusions through a literature survey of Hurwicz’s writings. Firstly, the mechanism design theory originated from the controversy over plan and market in the 1920s and 1930s and gradually extended to the core proposition of the relationship between government and market. Hurwicz established a pedigree of economic thought with inherent logic incorporating economic freedom, decentralized decision-making, information efficiency and incentive compatibility. Secondly, Hurwicz’s economic methodology focuses on the axiomatic logical analysis method of deductive reasoning. That is to say, it intends to interpret the economic world through functional relationship between digitized economic variables, mathematical logical deduction of axiomatic propositions and the equilibrium state in mechanical sense, emphasizes logical deduction over historical induction in research, reveals the logical mechanism from both holistic and individual points of view, and thus demonstrates the mechanism optimization of the real world.To sum it up, this paper extends the existing researches from three aspects. Firstly, it investigates Hurwicz’s economic thought in the context of the overall development of modern economics in the middle and late 20th century, and deconstructs the core propositions and basic elements in the pedigree of his thought. Secondly, it captures the logical substance and main characteristics of Hurwicz’s economic research methodology through a review of his academic track and achievements. Thirdly, based on the analysis of Hurwicz’s economic thought pedigree and its methodology, this paper sums up the implications for China’s further promotion of economic theory innovation and market-oriented reform deepening.
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