In game theory and economics, a mechanism is called incentive-compatible (IC)[1]: 415 if every participant can achieve their own best outcome by reporting their true preferences.
Low-risk clients who pretend to be high-risk would also be worse off.
[3] The concept is attributed to the Russian-born American economist Leonid Hurwicz.
Typical examples of DSIC mechanisms are second-price auctions and a simple majority vote between two choices.
Typical examples of non-DSIC mechanisms are ranked voting with three or more alternatives (by the Gibbard–Satterthwaite theorem) or first-price auctions.