The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2007
Leonid Hurwicz, Eric S. Maskin, Roger B. Myerson
After the 2007 Nobel Prize Announcements, visitors to Nobelprize.org had the possibility to submit questions to the 2007 Nobel Laureates. Here, Roger B. Myerson, answers a selection of the questions.
Question: It seems that regulation theory and applied regulation in general always tries to capture and control some market inefficiency or malfunction. But it seems this process goes in cycles: At the very moment the regulation is good enough and applied, the market creates a new inefficiency or product and/or learns how to escape from the grip of the applied framework. Do you believe your theory helps smoothen this dynamism in the long-run and how?
Hristo Minov, age 29, Bulgaria
Answer: I like your suggestion that some part of the business cycle may be driven by evolving change in our financial markets and the need for the regulatory system to adjust with some lag. This is an interesting idea. Mechanism design is relevant to the question of designing regulatory systems, but the most important element in the phenomena that you describe is the great complexity of the evolving financial markets themselves.
Question: Is it possible to apply and have practical daily use of the mechanism design theory or similar analytical means in everyday governmental budget planning and execution decisions?
John G. McLaughlin, age 54, United States
Answer: Budget planning and execution involve quantitative measures and benchmarks to guide and monitor agents' activities, and these are central elements in the analysis of mechanism design problems.
Question: Is it economically viable to measure the performance of an individual based on the performance of otherwise interested subordinates? Most specifically, I refer to how many school systems budgets are affected by the performance of students, many of whom do not yet fully appreciate the value of education and therefore do not fully apply themselves to their studies.
D. Rutledge, age 25, United States
Answer: The problem that you describe, of multiple agents who all affect the same outcome measure, is called moral hazard in teams. Unless we can find ways to measure individuals' separate contributions, such situations often have free rider problems.
Question: Who, or what, inspired you to enter your field of achievement?
Bobby Cerini, age 34, Australia
Answer: My parents and teachers and my friends encouraged and inspired me to work hard throughout my life. Reading Isaac Asimov's book "Foundation" inspired me to think about a career in mathematical social science.
Question: In one word, can you describe your reaction when you knew you had been awarded the Nobel Prize?
Young eager student, age 13, United States
Question: Has there ever been a time in your life and/or work when you have doubted what you were doing to the point that you seriously considered abandoning said work? Anna, age 16, United Kingdom
Answer: We all get tired and frustrated sometimes. But I do not remember seriously thinking about giving up my curiosity for questions in economics and other areas of social science.
Question: Congratulations for your well deserved awards. My question is: Who, of all the other Nobel Laureates in your field, would you most want to meet and why?
Jim Foley, age 45, United States
Answer: Among the Nobel Laureates whom I've never met, I would have especially liked to have met Friedrich von Hayek, whose beautiful 1945 paper was so influential in the area where I have worked.
Question: First of all, congratulations! What will you do with the prize money? You have done something extraordinary to win the Nobel Prize - perhaps you deserve to spend it all on yourself!
Scott MacLeod, age 38, United States
Answer: Thank you. We will not make any big changes in our lifestyle, but will be more comfortable in thinking about long-run planning for retirement.
Question: At any given time you obviously have several questions in your mind that you want to find answers for in your research. How do you choose which ones to pursue first and spend most of your efforts on?
Nurmukhammad Yusupov, age 30, Uzbekistan
Answer: You are asking an important question, but it is hard to explain the answer. I tell students that their intuition about what to work on is their greatest asset as scholars, even if they cannot explain their intuition. You may start with a big important question that you know society needs to understand better, and then you carefully take a small part of the big question and try to find a way to make progress in it. Or you may start with a methodological innovation that seems very promising to you, and look for important problems where it can be applied. And always you keep reading about the good work that other people are doing, because that is the most common source of inspiration, if we can see a way to complement or extend their work.