Designing an Efficient and Incentive-Compatible Mechanism of Self-Adjusting in the Provincial Income-Expenditure System

Designing an Efficient and Incentive-Compatible Mechanism of Self-Adjus ting in the Provincial Income-Expenditure Sys temAbs tract Mechanism design theory is the art of designing and guaranteeing a set of political and motivational rules in the interaction environment which, by creating the necessary and sufficient internal motivation in the agents, coordinates their behaviors in such a way that simultaneously realizes the individual goals and interes ts of the agents, and also the collective results desired by the policymakers and planners.This research aims to design efficient and incentive-compatible mechanisms of self-regulation in the incomeexpenditure sys tem of the provinces, to concurrently maximize the incentive to collect provincial public revenues and reduce provincial imbalances.The library method, in the form of s tudying the exis ting laws and regulations, and documents, was used to collect data and information for 2022, and were analyzed in accordance with the approach of mechanism design theory.The findings of the present s tudy show that by creating a complete and guaranteed dependence between the expression and collection of provincial public revenues with the amount of allocation of credits for the acquisition of provincial capital assets, and also the res toration of other provincial spending credits and the acquisition of capital assets, sufficient internal motivation in the provinces can be created.Such informed motivation maximizes the province's income and credit and realizes the provincial balances so that in the firs t year of implementation, at leas t 100 Hemats (thousand billion Rials) will be added to the country's general income in addition to the usual process.