Americans win economics Nobel

3 developed theory about what makes some markets work when others don't

October 16, 2007|By Robert Manor and Whitney Woodward

CHICAGO -- Roger Myerson spent the bulk of his career as an economic theorist at Northwestern University, but when the telephone call came from Sweden he was on the faculty of the University of Chicago.

Myerson and two other Americans were awarded the Nobel Prize in economics yesterday, adding to the University of Chicago's reputation as a powerhouse in the study of economics.

"I could tell by the Swedish accents that it was a different kind of call," said Myerson, described as a brilliant economist and a decent harmonica player. "It's been quite a day."

Myerson, along with Leonid Hurwicz of the University of Minnesota and Eric Maskin of the Institute for Advanced Study at Princeton, N.J., were honored by the Royal Swedish Academy of Sciences for work in the field of mechanism design theory. That area of economics seeks to understand why some markets work well and some do not.

Myerson, 56, did much of his research on auctions and the exchange of information in deals. He came to the University of Chicago in 2001, after carrying out his groundbreaking work at Northwestern for 25 years.

The University of Chicago added Myerson to an extraordinary list of Nobel laureates, declaring him to be the 24th winner in economics to have "ties" to the university.

Myerson seemed a bit overwhelmed during a morning news conference. But he was quick to praise both the University of Chicago and Northwestern.

"These are two great institutions, and I've had the privilege to work at both of them," he said. "Chicago, both North Side and South Side, is just a great place to do economic analysis."

Northwestern spokesman Al Cubbage said Myerson will be listed as one of seven former students or faculty members to have won. The school has had one faculty member win the prize - John Pople, who received the award in 1998 for his work in chemistry.

University of Chicago has seven Nobel laureates on its faculty and counts 80 winners, including Myerson, as having ties to the school because they were faculty members, students or researchers at the university during their careers.

Myerson is the 24th to win in economics. Among those attending his news conference were three faculty members to have a Nobel in economics: Gary Becker (1992), Robert Lucas (1995) and James Heckman (2000).

Mechanism design theory is an effort to find the optimal way for a market to work, if it can work.

Daniel McFadden, a professor of economics at the University of California at Berkeley who won the Nobel in 2000 and knows this year's winners, said mechanism design has evolved from an abstract concept decades ago into cutting-edge research.

"Their work is fundamental economic theory," McFadden said of the winners. "This really is what modern economics is about."

The theory provides a framework for evaluating whether different kinds of trading or markets are efficient.

The three winners will split a $1.5 million prize. "I have no idea what to do with the money," Myerson said.

Myerson has written two books, three newspaper opinion page pieces and 87 major academic papers.

His work broadened that of Hurwicz, who is 90 and initiated the concept. Hurwicz said that in recent years he didn't expect that much attention would be paid to his accomplishment.

Myerson said he gave a speech in Hurwicz's honor last year.

"Writing about those ideas, thinking about his [Hurwicz's] contribution to it, was just one of the best writing assignments I've ever gotten," he said.

Robert Manor and Whitney Woodward write for the Chicago Tribune.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.