Nobel Prize in Economics - Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson
Leonid Hurwicz
"for having laid the foundations of mechanism design theory".
Adam Smith's classical metaphor of the invisible hand refers to how the market, under ideal conditions, ensures an efficient allocation of scarce resources. But in practice conditions are usually not ideal; for example, competition is not completely free, consumers are not perfectly informed and privately desirable production and consumption may generate social costs and benefits...
Articles by Leonid Hurwicz
Chapter 28: Incentive aspects of decentralization. In: Kenneth J. Arrow and Michael D. Intriligator, Editor(s), Handbook of Mathematical Economics, Elsevier, 1986, Volume 3, Pages 1441-1482.
Leonid Hurwicz
...Furthermore, many transactions do not take place in open markets but within firms, in bargaining between individuals or interest groups and under a host of other institutional arrangements. How well do different such institutions, or allocation mechanisms, perform? What is the optimal mechanism to reach a certain goal, such as social welfare or private profit? Is government regulation called for, and if so, how is it best designed?...
Articles by Eric S. Maskin
Chapter 7 Mechanism Design for the Environment. In: Karl-Goran Maler and Jeffrey R. Vincent, Editor(s), Handbook of Environmental Economics, Elsevier, 2003, Volume 1, Environmental Degradation and Institutional Responses, Pages 305-324. Sandeep Baliga and Eric Maskin
Chapter 5 Implementation Theory. In: Kenneth J. Arrow, Amartya K. Sen and Kotaro Suzumura, Editor(s), Handbook of Social Choice and Welfare, Elsevier, 2002, Volume 1, Pages 237-288. Eric Maskin and Tomas Sjostrom
...These questions are difficult, particularly since information about individual preferences and available production technologies is usually dispersed among many actors who may use their private information to further their own interests. Mechanism design theory, initiated by Leonid Hurwicz and further developed by Eric Maskin and Roger Myerson, has greatly enhanced our understanding of the properties of optimal allocation mechanisms in such situations, accounting for individuals' incentives and private information. The theory allows us to distinguish situations in which markets work well from those in which they do not. It has helped economists identify efficient trading mechanisms, regulation schemes and voting procedures. Today, mechanism design theory plays a central role in many areas of economics and parts of political science.
