- Person
- Eric Maskin
- Lived
- b. 1950
- Field
- Economic theory
- From
- American
The story
Eric Maskin was born in New York in 1950 into a Jewish family and grew up in Alpine, New Jersey. As a Harvard mathematics student he stumbled into Kenneth Arrow’s course on information economics and discovered Leonid Hurwicz’s new theory of mechanism design, which asks how to build institutions that work when people have private information and their own interests. It combined, he later wrote, the rigour of pure mathematics with problems of real social importance.
Mechanism design faced a hidden difficulty. A set of rules, such as an auction or a voting procedure, can have several equilibria, several stable ways people might end up playing it. Even if one of them gives the outcome society wants, people may settle on another that does not. During a fellowship at Cambridge in 1976–77, Maskin asked when it is possible to design rules all of whose equilibria deliver a given social goal. He found that the answer turns on a property now known as Maskin monotonicity. If a goal lacks it, no mechanism can reliably achieve it. If it has it, and a mild condition called no veto power holds, such a mechanism exists, and his proof showed how to build it. His paper “Nash Equilibrium and Welfare Optimality”, written in 1977, circulated widely for twenty years before being published in 1999.
The Nobel committee, awarding Maskin the 2007 prize with Hurwicz and Roger Myerson, said he gave the first general solution to this problem and that the resulting implementation theory is a key part of modern mechanism design. Mechanism design, it said, has led to breakthroughs in regulation, corporate finance, taxation and voting procedures.
Maskin has applied these ideas himself, advising the Bank of Italy on its government bond auctions in the 1990s, writing on mechanism design for environmental regulation and, with Ned Foley, proposing the Total Vote Runoff reform of ranked-choice voting to make sure winners have majority support.
Why it matters
Maskin’s implementation theory tells designers of auctions, regulations and voting systems which goals their rules can actually guarantee, helping them build procedures that work when people act strategically.
About Eric Maskin
New York-born economist who showed when rules can be designed so that every outcome people reach is the one society wants, work used in auctions, voting reform and public projects. Nobel 2007.
Sources
- Information for the Public: The Prize in Economic Sciences 2007 NobelPrize.org
- Eric S. Maskin, Biographical NobelPrize.org
- Eric Maskin Wikipedia
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.