And the Nobel Prize in Economics goes to...

The 2007 Nobel Prize in economics was announced today, and goes to three American economists: Eric Maskin (Princeton), Roger Myerson (Chicago), and Leonid Hurwicz (University of MN). As is often the case, the winners were not on the "short list" of potential candidates, but turned out to be unexpected dark horses.

This is the sort of story that journalists have nightmares about--a bunch of economists, whom they've never heard of, win a Nobel prize for developing a discipline, mechanism design theory, which they've also never heard of. To explain briefly, a mechanism is a framework of rules that enable a market to function efficiently. Many markets don't need mechanisms to work well, but lots do (think organ allocation, public goods like utilities or water, or the sale of rare paintings). Mechanism design can take a variety of forms, like taxation or the creation of auctions.

At age 90, Hurwicz is the oldest Nobel laureate in history. There was some talk that if the academy wanted to award him, they needed to do it soon before he died. As for Myerson, there was no shortage of opinions on him from the Chicago alums around the Fed cafeteria.

"One time, Myerson was running up the stairs so I held the door open for him at the top, and he blew right past me without saying a word!"

"Ha, in his mind he was probably thinking 'And that's the way it should be.' Myerson is notorious for taking things out on his grad students whenever he's angry. Apparently, one time he was pissed at Levitt (of Freakonomics fame) over, I dunno, a hiring decision or something, and at this grad student's seminar presentation, he just completely ripped a new one in him."

In the meantime, I'd like to give a shout out to this year's Ig Nobel Prize winners, who are recognized for quirky, entertaining and sometimes scientifically legitimate research. This year's laureates include the developers of the "gay bomb" which would provoke widespread homosexual behavior amongst enemy troops (Peace), researchers who ironed out the problem of how sheets get wrinkled (Physics), and Cornell's very own Prof. Brian Wansink, who studied mindless eating behavior using self-refilling bowls of soup (Nutrition).