Leonid Hurwicz, Eric Maskin, and Roger Myerson

Win the Nobel Prize in Economics.  That’s funny, because this is precisely the kind of work which is going out of style in the broader profession.  These guys are smart, smart, smart, and Hurwicz is probably the best known of the three.  They are all high-powered theorists, doing incentives, mechanism design, and social choice theory.  None of them are easy to explain to your grandmother. 

Here is the scientific overview.

No doubt mechanism design, and the general problem of inducing truth-telling, will be with us forever.  But how practical are these general results?  Or have the theorists simply provided us with cautionary notes and left the real applications to the context-specific world of practice?  Did these guys get at the real reasons why we don’t organize the entire economy as a second-price auction?

Part of me thinks: "Hey, let’s say Natasha wants Yana to tell her the truth about when she will clean her room.  This stuff isn’t useful!"

Another part of me thinks: "It is most important to get theory right.  These guys are brilliant.  Only the philistines demand that all scientific contributions have immediate applications."

Some of you might argue: "These guys have already had a big impact on real world auctions and incentive schemes."  In terms of the induced improvement in human welfare, I find that a difficult case to make.  The important progress has come from recognizing much simpler truths about incentives.


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