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Americans honored for work

Theory details how buyers, sellers make most of deals

October 16, 2007

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Eric Maskin, professor at the Institute for Advanced Study in Princeton, N.J., has reason to smile in his office: He is one of three Americans to share the Nobel prize in economics.

Eric Maskin, professor at the Institute for Advanced Study in Princeton, N.J., has reason to smile in his office: He is one of three Americans to share the Nobel prize in economics.

— Americans Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson won the Nobel economics prize Monday for developing a theory that helps explain how sellers and buyers can maximize their gains from a transaction.

Hurwicz, 90, is the oldest Nobel winner ever, according to the academy.

"I really didn't expect it," said the Moscow-born researcher, an emeritus economics professor at the University of Minnesota in Minneapolis.

The three winners "laid the foundations of mechanism design theory," which plays a central role in contemporary economics and political science, the Royal Swedish Academy of Sciences said.

Essentially, the three men, starting in 1960 with Hurwicz, studied how game theory can help determine the best, most efficient method for allocating resources, the academy said.

Their research has helped explain how incentives and private information affect decision-making procedures involved in economic transactions including, for example, what insurance policies will provide the best coverage without inviting misuse.

It has been used in everything from negotiations over labor issues to the auctioning of government bonds and has helped countries and companies better understand how markets function even when conditions are rocky.

Hurwicz said Monday he was surprised to have won the award.

"There were times when other people said I was on the short list, but as time passed and nothing happened, I didn't expect the recognition would come because people who were familiar with my work were slowly dying off," he said.

Maskin, 56, is professor at the Institute for Advanced Study at Princeton, in New Jersey; and Myerson, 56, is a professor at the University of Chicago.

Maskin said he was relieved Hurwicz was among the winners.

"Many of us had hoped for many years that he would win," Maskin told reporters in Stockholm in a conference call. "He is 90 years old now, and we thought time was running out. It is a tremendous honor to have the opportunity to share the prize with him and with Roger Myerson."

Maskin said he received the unexpected call at his Princeton home - a house once occupied by physicist Albert Einstein - early Monday, then headed to his office.

"There are so many people who could win," Maskin said. "It's like winning the lottery, basically."

Myerson, who has been at the University of Chicago since 2001, becomes the 24th Nobel economics laureate with UC ties, according to the school.

Myerson said he had been inspired by the work of his fellow laureates.

"There were a lot of us working in this area in the late 1970s," he said, categorizing his work as investigating "how does information get used in society to allocate resources."

The award, known as the Nobel Memorial Prize in Economic Sciences, is not one of the original Nobel Prizes. It was created in 1968 by the Swedish central bank.

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