Monday, October 15, 2012

And the Riksbank Prize goes to...

In the category of, "Are you kidding me?" we see the so-called Nobel Prize for economics has gone to a duo for expanding market thinking into areas like kidney donation and mate-finding.  In an era when primitive, right-wing economic thought has triggered the near-collapse of the global economy and sees rioter in the streets, the Riksbank Prize has been awarded to folks who think that their genius should be used to make more effective.

This sort of aggressive irrelevance is hardly new to dismal science.  After all, John Bates Clark made his whole career out of expanding his understanding of the theory of Marginal Utility into areas such as labor relations.  It's this sort of foolishness that allows the knuckle-draggers to pretend that they can do intellectual rigor too.  Unfortunately, we don't spend our time ridiculing Clark's memory as it so richly deserves but we actually have a economic prize named for him too.

US duo awarded Nobel economics prize

The Local 15 Oct 12

The 2012 Nobel Prize in Economics has been awarded to US economists Alvin E. Roth and Lloyd S. Shapley for the research that helps explain market processes, the Royal Swedish Academy of Sciences announced on Monday.

The winners were awarded "for the theory of stable allocations and the practice of market design".

“This year's prize is awarded for an outstanding example of economic engineering,” wrote the Nobel Committee in a statement.

According to the Committee, this year's Prize “concerns a central economic problem: how to match different agents as well as possible”.

Shapley made early theoretical inroads into the subject, using game theory to analyze different matching methods in the 1950s and 1960s.

Together with U.S. economist David Gale, he examined “pairwise matching,” by looking at how 10 women and 10 men could be coupled up, while respecting their individual preferences.

The studies were carried out with a focus on “stable matching” – that being the most efficient matching as possible of, for example, students with schools or organ donors with patients.

Roth was later responsible for putting Shapley’s work into practice with research carried out in the 1980s and 1990s.

“Even though these two researchers worked independently of one another, the combination of Shapley's basic theory and Roth's empirical investigations, experiments and practical design has generated a flourishing field of research and improved the performance of many markets,” the committee wrote in a statement.

Staffan Normark, permanent secretary of the Royal Swedish Academy, explained that it was the perfect match of the two economists themselves that led to their work being recognized by the Nobel Committee.

“Lloyd Shapley is a giant in the field of game theory with a huge number of fantastic accomplishments,” he told The Local.

“I think this is a good match to put these two individuals together for this prize with all the theoretical work in the beginning and you have a really practical outcome developed quite recently by Roth with, for example the kidney transplant system in matchmaking.” more

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