15 October 2007

Nobel in Economics

According to the NY Times, today's Nobel in Economics went to the founders of "Mechanism Design Theory," of which I had never previously heard. According to the article, this theory:

[A]ddresses situations in which markets work imperfectly, such as when competition is not completely free, consumers are not fully informed or people hold back private information. In such cases — for example, when people refuse to divulge how much they are willing to pay for a good — trade can break down.

Their work also addresses cases where transactions do not take place openly in public markets, but within companies, in private bargaining between individuals or between interest groups.
Wow. Sounds just like the economics of the US Health Care system.

Someone should look into that.

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