An economist with close ties to the University was among the three Americans awarded the Nobel Prize in Economics yesterday.
Eric Maskin, a professor at the Institute for Advanced Study who has been a visiting lecturer with the rank of professor at the University since 2000, won the prize yesterday for his contributions to mechanism design theory, a branch of economics that describes how institutions function in the midst of inefficient markets, such as when competition is not open or when individuals have asymmetric or private information.
Maskin found out that he won the Nobel at 6:30 yesterday morning. "I was in bed when the secretary general of the Royal Swedish Academy called," Maskin said in an interview yesterday. "I was stunned and excited."
Leonid Hurwicz, a professor at the University of Minnesota who first developed the theory, and Roger Myerson of the University of Chicago were co-recipients of the prize. They will split 10 million Swedish kronor ($1.56 million) for "having laid the foundations of mechanism design theory."
Maskin's major contribution was applying the theory to modern-day political and economic institutions, such as taxation, bonds and voting procedures.
Though Maskin's contributions are very technical, economics professor Wolfgang Pesendorfer said they boil down to asking: Under what conditions can people be given incentives so that the outcome is guaranteed to meet a given societal objective, despite the fact that individuals act in their own interest?
Maskin's permanent position is at the Institute, located about a mile from campus, as the Albert O. Hirschman Professor in the School of Social Science. Though Maskin has also been teaching at Princeton, the two institutions do not have formal ties.
"He is part of the intellectual community in economic theory at Princeton," said Bo Honore, chair of the University's economics department, in a statement.
Daisuke Nakajima GS '05, now an assistant professor of economics at the University of Michigan, said he remembers the professor commuting between the Institute and the University on a bicycle, a green knapsack over his shoulder. "If you did not know him, you would never think that he was a Nobel Prize winner," Nakajima said.
Three University professors have won the Nobel for economics before Maskin: Arthur Lewis in 1979, John Nash in 1994 and Daniel Kahneman in 2002. Maskin's work builds on previous studies conducted by Nash, and there are connections between Nash's game theory and Maskin's current work, Nash said in an email.
Maskin said he works "quite closely" with the University and teaches courses each year, though he is not required to teach because the Institute supports his research. He also attends weekly seminars in the economics department every week and supervises doctoral dissertations.
But the local mechanism design economist is taking a year off. He last taught ECO 512: Advanced Economic Theory II in fall 2006.
A Prized Professor
Maskin's former students were unanimous in their admiration of their professor's breadth of knowledge, kindness and dedication to teaching.
Glen Weyl '07, who expects to earn his Ph.D. in economics from the University next spring, took two classes with Maskin, including ECO 512 last fall. "He is, without a doubt, one of the best teachers I have ever had," Weyl said in an email. "I have never seen anyone with his passion for and devotion to such abstract ideas. Even more importantly, Eric has a truly unique capacity for making the most complicated mathematical results not only comprehensible, but intuitive."
Nakajima said in an email that Maskin's class was one of the best courses he had taken while at Princeton, calling it "perfect."
Maskin was one of Nakajima's dissertation advisers. "He was also perfect as an adviser. Though he was not my main adviser, he spent lots of time in reading my dissertation line-byline and advised me on how to improve it, which is more than what a second adviser is expected to do in Economics."
Gustav Sigurdsson GS '06 had Maskin as his main dissertation adviser. "I feel incredibly fortunate to have had Eric as my dissertation adviser at Princeton," Sigurdsson, now an assistant professor at the Wharton School, said in an email. "His dedication is extraordinary — I am still amazed every time I receive his feedback on my work and find detailed line-byline comments on long mathematical proofs."
Maskin's students also lauded him for his clarity, teaching skills and ability to make complex math problems understandable.
"One thing that really distinguishes Eric is how precise and careful he is," Weyl said. "He would often pause for as much as 45 seconds in the middle of a lecture to make sure he said exactly what should be said to make the material transparent. He is really one of those professors that makes you think, 'Wow, I am really watching one of the great minds in action,' " Weyl said.
Kareen Rozen GS '07, who is now an assistant professor at Yale, said Maskin's positive attitude, approachable nature and clarity shaped the way she thinks, writes and presents her independent research.
"No matter how you might feel when you step into his office, you always leave feeling inspired to tackle the most difficult of questions," she said in an email, adding that she hopes to emulate his positive attitude in dealing with her own students.
Maskin said that he was not expecting to win the Nobel Prize. "There are many people who could have won," he said. "The one thing I was sort of expecting was Leo Hurwicz winning. He is the father of mechanism design theory."
Maskin was worried that time was running out for Hurwicz, who is 90 years old. "Fortunately, they gave it to him."
Some in the economics community were not expecting someone as young as Myerson or Maskin, who are both 56 years old, to win the Nobel this year.
In the days leading up to yesterday's announcement, "Freakonomics" author Steven Levitt, Harvard professor Gregory Mankiw '80 and Thomson Scientific had all predicted other economists for the win.
"Maskin and Myerson are both young by Nobel standards," Levitt said in an email. "That is why their names have not been front and center in the Nobel discussion. If you had asked me [on Sunday] I would have told you both had a high lifetime probability of winning."
Even Maskin's wife, Gayle Sawtelle, said she was not expecting her husband to win.
Sawtelle, who is a history lecturer at the University, said in an email, "he's much too young to win a Nobel in economics."
When the phone rang in her home early Monday morning, "I assumed [it] was a wrong number or news that someone in the family had died," Sawtelle said. "When we woke our daughter, Charlotte, to tell her the news she thought we were joking. We were all happy and befuddled."
Sawtelle mused on the coincidence that her family lives in a house formerly occupied by two Nobel Laureates. "I think there's Einstein karma here because he had a Nobel when he moved in," she said. The next occupant, MIT physicist Frank Wilczek, won a Nobel in 2004 shortly after he moved out of the house.
But other economists said that Maskin's win was not at all unexpected.
Economics professor Faruk Gul said that if he knew an economic theorist was going to be chosen, Maskin would have easily made the shortlist in his mind.
Pesendorfer said that "It is always hard to predict the winners, but Maskin, Myerson and Hurwicz are natural choices in economic theory. Perhaps Mankiw thought that the prize would not go to a theorist."
Even Levitt, who did not predict Maskin as this year's Nobel Laureate, had kind words for him. "Back when I was an undergraduate at Harvard, I remember the one time I worked up the courage to go knock on his door to talk about some theories I was working on and very excited by," he said.
"He could not have been more gracious and generous with his time as he systematically dismantled each of my ideas and showed me why all my intuition was wrong. I left his office that day minus a research project, but with an awe for his intellect."
As economic scholars continued to chatter over Maskin's award into the night, the professor said he was exhausted and looking forward to a smaller reward — "a quiet evening at home with the family and a bottle of champagne."
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