14 Replies to “The Nobel economists”

  1. After clicking the outgoing link on mechanism design theory, one of the Nobel winner names looked familiar to me – sure enough, Roger Myerson is the author of the game theory book in my study at home, a 1997 work that I bought around 2000. I’d like to say “I sure can pick out greatness in advance,” but in reality it simply seemed like the best mix of simplicity and complexity to introduce the topic with. The title is Game Theory: Analysis of Conflict, if anyone’s looking for some recommended reading.

  2. After clicking the outgoing link on mechanism design theory, one of the Nobel winner names looked familiar to me – sure enough, Roger Myerson is the author of the game theory book in my study at home, a 1997 work that I bought around 2000. I’d like to say “I sure can pick out greatness in advance,” but in reality it simply seemed like the best mix of simplicity and complexity to introduce the topic with. The title is Game Theory: Analysis of Conflict, if anyone’s looking for some recommended reading.

  3. Worth: I remember vaguely you had said once – on my blog or yours – that you planned to read it, if only to respond to my tangential references 🙂

    Now is the time!

    I cannot remember what my primer was on game theory, but must have been in b-school in early 1990s. Subsequent intra- and inter-country moves meant I lost it. Now I have one by Romp (OUP) called Game Theory.

    Thanks.

  4. Worth: I remember vaguely you had said once – on my blog or yours – that you planned to read it, if only to respond to my tangential references 🙂

    Now is the time!

    I cannot remember what my primer was on game theory, but must have been in b-school in early 1990s. Subsequent intra- and inter-country moves meant I lost it. Now I have one by Romp (OUP) called Game Theory.

    Thanks.

  5. Mahendra:

    I don’t know if you mean this in jest and are pulling my leg, but I will take a chance at looking like “I have been punk’d” 🙂

    John Nash’s contribution to game theory was the concept of ‘Nash equilibrium’. A dominant way of driving – say right hand drive in the UK and left hand drive in the US – is an example of a Nash equilibrium.

    In a system which is in Nash equilibrium, if one player decided to change his strategy, he will not benefit unless others change their strategies too. To extend the example above, if A decides to do right hand driving in the US, and nobody else does, he will most likely get killed. However if everyone else changes too, then barring some mishaps on day 1, the system will settle into a new Nash equilibrium.

    That was about a given game.

    Mechanism design is about designing a “game” so that some end goals can be attained. So for instance, the design of a market, say, water supply, when the industry is being deregulated, would try to address considerations of fair price to consumers, prevention of excessive profiteering while allowing reasonable profits, equal access etc.

    The theory also explains questions such as why governments should intervene in health provision. Given a free market, excessive profiteering could result and the overall economic outcomes – early and avoidable mortality, excessive morbidity and so on resulting from people’s inability to afford treatment – will be at a considerable social cost, whereas to insurance firms and to profit-making hospitals the situation would just be a moral hazard.

    Works? Sorry, I cannot spend more time on this today. But if you follow links from my recent music post, you will see an excellent book on network economics which can explain my water industry example to you.

    For a reference on Game Theory, see Worth’s note above.

    Thanks.

  6. Mahendra:

    I don’t know if you mean this in jest and are pulling my leg, but I will take a chance at looking like “I have been punk’d” 🙂

    John Nash’s contribution to game theory was the concept of ‘Nash equilibrium’. A dominant way of driving – say right hand drive in the UK and left hand drive in the US – is an example of a Nash equilibrium.

    In a system which is in Nash equilibrium, if one player decided to change his strategy, he will not benefit unless others change their strategies too. To extend the example above, if A decides to do right hand driving in the US, and nobody else does, he will most likely get killed. However if everyone else changes too, then barring some mishaps on day 1, the system will settle into a new Nash equilibrium.

    That was about a given game.

    Mechanism design is about designing a “game” so that some end goals can be attained. So for instance, the design of a market, say, water supply, when the industry is being deregulated, would try to address considerations of fair price to consumers, prevention of excessive profiteering while allowing reasonable profits, equal access etc.

    The theory also explains questions such as why governments should intervene in health provision. Given a free market, excessive profiteering could result and the overall economic outcomes – early and avoidable mortality, excessive morbidity and so on resulting from people’s inability to afford treatment – will be at a considerable social cost, whereas to insurance firms and to profit-making hospitals the situation would just be a moral hazard.

    Works? Sorry, I cannot spend more time on this today. But if you follow links from my recent music post, you will see an excellent book on network economics which can explain my water industry example to you.

    For a reference on Game Theory, see Worth’s note above.

    Thanks.

  7. Shefaly: I do not pull anyone’s legs while commenting on their blog. And I do not mean this in jest.

    I seem to be a very slow-minded person when it comes to undersanding mathematical theories. Even after reading Godel Escher Bach, I’m still coming to terms with Godel’s theorem. Likewise with Nash’s game theory. And chaos theory. And quantum mechanics. In spite of reading and studying books on the topic, I am still coming to terms with the theorems and theories espoused by such geniuses.

    I guess I’m slow. I cannot grasp Nash’s theory reading two paragraphs of your comment or Worth’s comment. I’m afraid I’ll have to carefully study a book on it, which I have not yet done so.

    That is the reason I’m sincerely saying that the mechanism design theory nobels have gone over my head. No pulling your legs here, just pulling my hair at how many things in the world I don’t understand!

  8. Shefaly: I do not pull anyone’s legs while commenting on their blog. And I do not mean this in jest.

    I seem to be a very slow-minded person when it comes to undersanding mathematical theories. Even after reading Godel Escher Bach, I’m still coming to terms with Godel’s theorem. Likewise with Nash’s game theory. And chaos theory. And quantum mechanics. In spite of reading and studying books on the topic, I am still coming to terms with the theorems and theories espoused by such geniuses.

    I guess I’m slow. I cannot grasp Nash’s theory reading two paragraphs of your comment or Worth’s comment. I’m afraid I’ll have to carefully study a book on it, which I have not yet done so.

    That is the reason I’m sincerely saying that the mechanism design theory nobels have gone over my head. No pulling your legs here, just pulling my hair at how many things in the world I don’t understand!

  9. Relax, Mahendra!
    Think like me: the more things you don’t know, the more reliable, famous, and accomplished you are in what you do know. Now concentrate on exposing that, what you do know!
    🙂
    Disclaimer: I don’t share Mahendra’s qualms about using humor in anyone’s blogs.

  10. Relax, Mahendra!
    Think like me: the more things you don’t know, the more reliable, famous, and accomplished you are in what you do know. Now concentrate on exposing that, what you do know!
    🙂
    Disclaimer: I don’t share Mahendra’s qualms about using humor in anyone’s blogs.

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