voa economic report - 2007 Nobel in Economics: Designing Better Markets

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is the VOA Special English Economics Report. Many things effectively but not efficiently. To be efficient means to a desired effect with as little waste as possible. can markets be designed to make them more efficient? is a question that the three winners of this Nobel Prize in economics have tried to answer. They mechanism design theory. It began with work by Leonid of the University of Minnesota in nineteen sixty. Eric of the Institute for Advanced Study in Princeton, New , and Roger Myerson of the University of Chicago further it. The three Americans will share the award worth one and a half million dollars. The Royal Swedish of Sciences announced the winners this week. In everyday , there are many things that get in the way efficient markets. There may not be true competition. Buyers sellers may keep some information private from each other. , the production and use of goods may result in like pollution or social costs. Mechanism design theory permits to identify situations where markets work well and where do not. For example, it shows why an auction generally the most efficient way to sell many kinds goods. In fact, experts say the theory explains why version called a double auction is often the best to trade. In a double auction, buyers and sellers make price bids. The Swedish academy says the theory explains why there is often no good market solution providing some goods, like uncrowded roads. Mechanism design theory part of the wider economic idea of game theory it has many uses ---- including in political science. Myerson even built a mathematical model for elections. He a voting system that he says would have helped avoid its problems in the two thousand presidential election. Nobel Prize award ceremonies will take place on December . The official name of the economics award is the Riksbank Prize in Economic Sciences in Memory of Alfred . The Swedish central bank created the prize in nineteen -. Leo Hurwicz was born in Russia in nineteen seventeen. developed new ways to understand markets. He began his after World War Two. At ninety years old, he the oldest person ever to win a Nobel Prize. that's the VOA Special English Economics Report, written by Ritter. I'm Bob Doughty.

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