I predicted wrong

3 Americans to Share Nobel Prize in Economics – New York Times

Leonid Hurwicz of the University of Minnesota, Eric S. Maskin of the Institute for Advanced Study at Princeton University 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.

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. It also said the winners’ work has helped determine whether government regulation may sometimes be necessary.

But not just when regulation may be necessary, but a way of thinking about how to design the regulation, taking into account the informational constraints.  The work lead to a revolution in the design of instututions and the interpretation of existing institutions.

Yay.

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