They were selected “for having laid the foundations of mechanism design theory.”
Americans Leonid Hurwiez, Eric Maskin and Roger Myerson were awarded the Nobel Memorial Prize in Economic Sciences, “for having laid the foundations of mechanism design theory,” the Nobel Foundation announced today.
Mr. Hurwiez, 90, a Russian-born professor emeritus of Economics at University of Minnesota, initiated mechanism design theory in 1960.
His partners, Mr. Maskin, 56, a professor at Princeton University, and Mr. Myerson, 56, a professor at University of Chicago, later applied his theory and joined him to develop the key concept of allocation mechanisms.
In an effort to understand what institutions are best suited to minimize the economic losses generated by private information, the men sought to answer the central question of which resource allocation mechanism, or institution, produces the best attainable outcome under general conditions, the Nobel Foundation said in a statment.
Among other key notions, Mr. Hurwiez developed his mechanism design theory into a framework in which the predicted outcomes associated with markets and market-like institutions can be compared with the predicted outcomes of an array of alternative trading institutions, the Nobel Foundation said.
Using Mr. Hurwiez’s theory, the men developed a roundabout method in which researchers analyze direct mechanisms’ mathematical structures — which are not accurate representations of real-world institutions — and translate back the mechanisms into realistic results, the Nobel Foundation said.
This method has allowed researchers to solve problematic institutional design.
The men will receive their prizes of $1.5 million (to be split between the three), a gold medal and a diploma from Sweden’s king on Dec. 10 — the 111th anniversary of Alfred Nobel’s death.
