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October 15, 2007
3 Americans Share Nobel in Economics
Three American economists are sharing this year's Nobel Prize in Economics:
Leonid Hurwicz of the University of Minnesota, Eric S. Maskin of the Institute for Advanced Study in Princeton, New Jersey, and Roger B. Myerson of the University of Chicago shared the award for “having laid the foundations of mechanism design theory,” the Royal Swedish Academy of Sciences said. For an entertaining and fascinating explanation of "mechanism design theory," Alex Tabarrok at Marginal Revolutions has written a scintillating primer for the economically challenged among us.
Their work addresses situations in which markets work imperfectly, such as when competition is not completely free, consumers are not fully informed or people hold back private information.
It also addresses cases where transactions do not take place openly in public markets, but within companies, in private bargaining between individuals or between interest groups.
The prize winners’ groundbreaking work has been pivotal in assessing how institutions perform under such conditions, and in designing the best mechanism to make sure that goals, such as social welfare or private profit, are reached, the academy said. The winners’ work has helped determine whether government regulation may sometimes be necessary.