The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2014 has gone to Jean Tirole, the superstar of the game theory revolution in industrial organization and corporate finance, “for his analysis of market power and regulation”. Says the official one- line prize motivation.
Tirole, albeit young by historic standards – with age 61 he is apparently half a dozen years younger than your average Nobel Prize laureate –, has been on many people’s lists for years. It is not just because of excellent textbooks such as The Theory of Industrial Organization (which came out when I was a graduate student) and The Theory of Corporate Finance (out of which I taught for a number of years), or his undoubtable academic – according to scholar google more than 80,000 citations and an H-index of 115 (86 since 2009) — and regulatory influence.
Tirole has thought hard about problems such as formal and real authority in organizations, the role of collusion in organizations, incomplete contracts, the economics of open source, and even topics such as extrinsic/intrinsic motivation, self-confidence, and personal motivation. And when he has done so, he almost always has done it with bare-bones models. You will not find in a Tirole paper, or in his books for that matter, gratuitous math even though he was trained as an engineer. Instead you find elegance and economic insights. Heaps of both. I like to think of Tirole as the legitimate heir to Adam Smith, the Adam Smith in particular of Book V of The Wealth of Nations.
As I write this brief note, it is becoming clear quickly that the Nobel Prize Committee’s choice is widely applauded.
Justin Wolfers has an eminently readable piece in the NYTimes, arguing …
“The online chatter among my economist friends this morning has been entirely enthusiastic about Mr. Tirole’s prize. The consensus is that he represents the very best of economics. He tackles big problems, he develops new tools when they’re needed, and his research is always grounded in the real world.” All true.
I predict a flood of similarly kind appreciations coming in later today.
This Nobel prize is a well-deserved award that goes to a very decent fellow indeed.