5 special theories received the Nobel Prize in Economics

The 2013 Nobel season has officially started on October 7. It is expected that the Nobel Prize in Economics will be awarded on October 14. On this occasion, we would like to review the seemingly "irrelevant" doctrines that have received the Nobel Prize in Economics in the last few decades.

1. Manage resources

In 2009, the Nobel Prize in Economics went to Elinor Ostrom of Indiana University. This is also the first time since its founding, the Nobel Prize in Economics has been awarded to a woman.

Ms. Ostrom has a research project in the field of economic governance. Accordingly, a group of people who use the common property of the community can fully manage that asset.

Ms. Ostrom rejected the argument that common property no one cared about managing to promote the individual role in owning and using.

Elinor Ostrom herself is also quite a stranger to the economics world. She is a political scientist, received a bachelor's degree and a doctorate in political science from the University of California in Los Angeles and teaches political science.

Elinor Ostrom's research has opened new directions for economics: Instead of just interested in markets, prices, models and mathematical tools such as universal keys, homes. economics needs to be concerned about institutions and specific cases in which the market is ineffective.

They also point out that economics does not exist as a separate science but has a close connection with other sciences.

When a political scientist conducts research on resource management and receives a Nobel Prize in Economics, it is clear that economics is not simply a story of numbers and models, unemployment and inflation, gold price and USD price as many people still believe.

With the theory of resource management, Elinor Ostrom was awarded the Nobel Prize in Economics 2009. (Photo: aapss.org)

2. Psychology in economics

In 2002, the Swedish Royal Academy of Sciences decided to award the Nobel Prize for Economics to Professor Daniel Kahneman, Princeton University, USA, for combining the perceptions of psychological research for economic science, especially refers to human vision and decision making in risk-based conditions.

The prevailing views in psychology see people as a system of coding and understanding the information available in a conscious way, but in which less aware factors also govern decisions in a timely manner. interactive process. These factors include intellectual and intellectual models to understand certain situations, emotions, attitudes and memory about previous decisions and their consequences.

In a large study of human behavior based on surveys and experiments, Professor Daniel Kahneman and other psychologists have mentioned the hypothesis of economic rationality in some economic decisions.

In fact, decision makers often do not assess risk events according to probability laws, nor do they make decisions according to the expected maximization benefit theory.

Modern research in the boundary between economics and psychology has shown that concepts such as limited rationality, limited self-interest and limited autonomy are important factors behind phenomena. economy. Specifically, the knowledge of psychology has a strong impact on the current development of financial economy.

3. Information asymmetric

In 2001 the Royal Swedish Academy of Sciences decided to award the Nobel Prize in Economics to three researchers, George A. Akerlof, University of California, USA; A. Michael Spence, Stanford University, USA and Joseph E. Stiglitz, Columbia University, USA about their market analysis.

Why is interest rate so high in the local lending market in third world countries? Why do people want to buy a used car with a wholesaler rather than a private vendor? Why are rich landlords not at risk of crops in contracts with poor farmers? Scientists who won the prize in 2001 gave general answers to these questions and expanded this theory as they discussed it with the actual theory of asymmetric information: A subject in the market. The school has much better information than the other subject.

More clearly, Akerlof has proved that asymmetric information can create the opposite choice in the market. Spence demonstrates that under certain conditions, actors with good information can improve their market results by providing private information to subjects with poor information.

Stiglitz shows that an uninformed subject can sometimes obtain information from a subject with information through screening, for example by making a choice from a contract menu for a specific transaction. .

The contributions of the three researchers have changed the way economists think about market performance, while creating a modern economic information economy.

4. Game theory

In 1994, the Royal Swedish Academy of Sciences decided to award the Nobel Prize in Economics to Professor John C. Harsanyi, University of California, Berkeley, CA, USA; Dr. John F. Nash, Princeton University, Princeton, NJ, USA; Professor-Dr. Reinhard Selten, Rheinische Friedrich-Wilhelms University, Bonn, Germany for pioneering analysis of equilibrium in non-cooperative game theory.

Game theory stems from studies of games such as chess or poker. It is well known that in these games, players must think ahead - devise a strategy based on expected countermeasures from other players. Such strategic interactions also represent many economic situations, and game theory has thus proved useful in economic analysis.

The key point of this theory is the concept of equilibrium, the equilibrium point used to predict the outcome of strategic interaction. John F. Nash, Reinhard Selten and John C. Harsanyi are three scientists who have made outstanding contributions to this type of analysis.

When some businesses dominate a market, when countries have to make an agreement on trade policy or environmental policy, when the labor market parties negotiate wages, and when a government leaves abandon regulations on a market, privatize companies or pursue economic policies, each of the aforementioned subjects should consider the reactions and expectations of other actors regarding decisions Their, that is strategic interaction.

5. Public selection

American economist James M. Buchanan Jr. received the Nobel Prize in economics in 1986 for his contributions to political decision theory and public choice. The specific results of the policies are predictable and predetermined by the rules themselves.

Mr. James McGill Buchanan is one of the largest economists of the 20th century, the father of economic choice. This is a specialization on issues related to how politicians and governments budget levels for the economic and welfare sector, how mechanisms and laws affect badly on the region. public economy .

One of Buchanan's most important contributions to economics is the distinction between two levels of public choice: the constitutional level, and the post-constitutional level. The constitutional level is the level of setting process rules about how public options must be decided, and the post-constitutional level is the use of process rules to achieve public choices.

Buchanan pays special attention to the first level, ie the constitutional level, and also draws economists to study this constitutional level: what constitutions affect public options, comparisons between constitutions How are their weak points, how good is the constitution for democracy .

Using Buchanan's insights on the political process, human nature and free market, we can better predict political decisions.