Harvard Graduates Share Economic Nobel Prize

3 Americans share economics Nobel

By Associated Press | Boston Globe | October 16, 2007

NEW YORK - Three US economists, one of them a 90-year-old professor emeritus from Minnesota, will share this year's Nobel prize in economics for their work on how people's knowledge and self-interest affect their behavior in the market or in social situations such as voting and labor negotiations.

Leonid Hurwicz, who lives in Minneapolis, is the oldest winner ever of the Nobel, the Royal Swedish Academy of Sciences said yesterday.

His work - along with that of Eric S. Maskin and Roger B. Myerson, both 56 - led to a theory that plays a wide-ranging role in contemporary economics and political science, touching on areas as diverse as labor contract negotiations, auctions of government bonds, voting procedures, and the structuring of insurance policies.

In its citation, the academy said their work on "mechanism design theory" has made it possible to "distinguish situations in which markets work well from those in which they do not." This, it added, helped economists identify efficient trading mechanisms, regulatory schemes, and voting procedures.

They will share a $1.5 million prize, to be awarded in December.

Hurwicz, who is an emeritus economics professor at the University of Minnesota in Minneapolis, started work on this area in 1960.

"I really didn't expect it," the Moscow-born researcher said of the Nobel announcement. In fact Hurwicz, who is hard of hearing, said he initially thought the call from Sweden about the prize was a hoax.

"There were times when other people said I was on the short list, but as time passed and nothing happened I didn't expect the recognition . . . because people who were familiar with my work were slowly dying off," he said.

Maskin is a professor at the Institute for Advanced Study at Princeton, N.J., and Myerson is a professor at the University of Chicago in Illinois. Maskin and Myerson both finished their PhDs at Harvard University in 1976.

Maskin said he was relieved Hurwicz was among the winners.

"Many of us had hoped for many years that he would win," Maskin told reporters in Stockholm in a conference call. "He is 90 years old now, and we thought time was running out. It is a tremendous honor to have the opportunity to share the prize with him and with Roger Myerson."