Nobel 2007: Economics

Arijit Sen in the Telegraph:

When one delves into the mechanism design literature, one is dazzled by the plethora of situations to which the theory has been applied. Maskin and Myerson, along with their co-authors, have explored issues of auction design, pollution control, public utility regulation, privatization, voting rules, and electoral systems. On reflection, this is not surprising as the logic of mechanism design is germane to any context where the central issue is to device the rules of the game for a group of strategic participants — be it the authority structure within an organization, the legal system in a country, or a customs union among a group of countries.

Consequently, the theory enables us to view a large number of economic and political institutions as mechanisms that aim to generate a set of socially desirable outcomes. This has been Leo Hurwicz’s consistent vision over the course of his research. One of his recent papers addresses the issue of how to prevent the “implementers” of various societal mechanisms — the politicians, the bureaucrats, and the police — from exploiting the participants. For the citizens of India today, the theme of the paper — and its title — But Who will Guard the Guardians? — should find a deep resonance.

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