US Trio Wins Nobel prize By Vinnee Tong, NEW YORK (AP)

It is very exciting that three Economics professors from the US have received recognition from the Nobel Foundation and have been awarded the Nobel Economics prize. All three professors, including, 90 year old Emeritus Professor Leonid Hurwicz, have been working the since 1960’s investigating “how people’s knowledge and self-interest affect their behavior in the market or in social situations such as voting and labor negotiations.”

While some of these ideas will sound familiar to you now as an “experienced” AP Economics students, their “mechanism design theory” will be new to you. This theory builds on another theory that we will discuss later on this year, Game Theory. What I appreciate about the these three professors is that they have been dedicated to developing economic theories in order to understand real life situations. One professor has even applied his formula in such a way that he has written about how it can be used to rebuild the government in Iraq. Essentially, the three men studied how game theory can help determine the best, most efficient method for decision-making.

Essentially, the three men studied how game theory can help determine the best, most efficient method for decision-making.

Game theory was advanced by John Nash, the subject of the film “A Beautiful Mind” and who received the prize in 1994.

Stephen Morris, an economics professor at Princeton University, said a big part of why the winners were chosen was their proof of how people deciding as a group can lead to a best outcome for many transactions, whether it’s in a marketplace or in the political arena.

He added that he thought the academy’s choice would be popular among economists, saying: “I think it was seen as inevitable that this work should be recognized somehow.”

Much like game theory, mechanism design is applied to situations where perfect markets cannot be found, such as a political give-and-take between different interest groups or even within companies themselves.

The trio’s work showed how to reach a desired outcome, such as improvements in social welfare or fatter profits, and what sort of government regulation should be put into place.

Myerson explored the concept in detail in his work, “Game Theory: Analysis of Conflict,” and built a mathematical model that analyzed elections. Myerson has even extended his work to examining how best to rebuild a government in Iraq.

“Chances for successful democracy may depend critically on introducing the right kind of transitional structures,” he wrote in a May 2003 editorial titled, “How to build democracy in Iraq.”
Game theory was advanced by John Nash, the subject of the film “A Beautiful Mind” and who received the prize in 1994.

Stephen Morris, an economics professor at Princeton University, said a big part of why the winners were chosen was their proof of how people deciding as a group can lead to a best outcome for many transactions, whether it’s in a marketplace or in the political arena.

He added that he thought the academy’s choice would be popular among economists, saying: “I think it was seen as inevitable that this work should be recognized somehow.”

Much like game theory, mechanism design is applied to situations where perfect markets cannot be found, such as a political give-and-take between different interest groups or even within companies themselves.

The trio’s work showed how to reach a desired outcome, such as improvements in social welfare or fatter profits, and what sort of government regulation should be put into place.

Myerson explored the concept in detail in his work, “Game Theory: Analysis of Conflict,” and built a mathematical model that analyzed elections. Myerson has even extended his work to examining how best to rebuild a government in Iraq.

“Chances for successful democracy may depend critically on introducing the right kind of transitional structures,” he wrote in a May 2003 editorial titled, “How to build democracy in Iraq.”

Essentially, the three men studied how game theory can help determine the best, most efficient method for decision-making.

Game theory was advanced by John Nash, the subject of the film “A Beautiful Mind” and who received the prize in 1994.

Stephen Morris, an economics professor at Princeton University, said a big part of why the winners were chosen was their proof of how people deciding as a group can lead to a best outcome for many transactions, whether it’s in a marketplace or in the political arena.

He added that he thought the academy’s choice would be popular among economists, saying: “I think it was seen as inevitable that this work should be recognized somehow.”

Much like game theory, mechanism design is applied to situations where perfect markets cannot be found, such as a political give-and-take between different interest groups or even within companies themselves.

The trio’s work showed how to reach a desired outcome, such as improvements in social welfare or fatter profits, and what sort of government regulation should be put into place.

Myerson explored the concept in detail in his work, “Game Theory: Analysis of Conflict,” and built a mathematical model that analyzed elections. Myerson has even extended his work to examining how best to rebuild a government in Iraq.

“Chances for successful democracy may depend critically on introducing the right kind of transitional structures,” he wrote in a May 2003 editorial titled, “How to build democracy in Iraq.”

I hope that you take time to read the article and to research the three professors and their work.

About the author: Michelle Close teaches AP Economics and IB Economics the Shanghai American School where she is also the CAS coordinator for the IB program. Michelle has taught in a wide variety of school settings for the last twenty years and truly values teaching, living and traveling abroad. Michelle has been living in Shanghai with her husband Kevin and two children, Maya and Cooper since 2006 and she previously taught at the Columbus School in Medellin, Colombia. She calls Boston and The Bay Area her home away from home.

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