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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Nov. 1, 2007 / 20 Mar-Cheshvan 5768

Nobel Prize in Economics — where Team USA still dominates the game

By Jonathan V. Last


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http://www.JewishWorldReview.com | Remember the Cold War era, when people obsessed over the medal count during the Olympics? We loved watching plucky American amateurs clobbering the mechanical, godless Reds, every one of them - even their little teenage gymnasts - looming like Ivan Drago.

Alas, the Olympics have lost some of their luster after the fall of communism. Gone is the thrill of nationalist rah-rah. It's our Nike-endorsing, semiprofessional athletes against everyone else's Nike-endorsing, semiprofessional athletes, and basically, we're all friends now. Boring.

Everyone needs to get his jingoistic kicks somewhere, though. I get mine from the Nobel Prize awards. America has never fared particularly well in the Peace or Literature events, taking home only 20 medals in the former and a disgraceful 12 medals in the latter. Since the 1930s, we've done well in Medicine and have been quite strong in both Chemistry (42 medals) and Physics (53).

But it's the Sveriges Riksbank Prize in Economic Sciences - more commonly known as the Nobel Prize in Economics - where we dominate. We're the New York Yankees of economic theory, having won or shared the prize in 29 of the 39 years it's been given. If a snooty European ever tries badgering you about climate change, or the state of Team USA basketball, or Iraq, just say, "Yeah? Well, we own the Sveriges Riksbank Prize." That's how you end an argument.

Recently, like any fan, I was sitting at home covered in red, white and blue body paint, just waiting for the announcement of this year's award. I was pretty juiced when the committee gave it to Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson, because in addition to the normal welling of national pride, Hurwicz, Maskin and Myerson are pioneers in a particularly interesting branch of economics: mechanism-design theory.

Mechanism-design theory is an offshoot of the more popular field of game theory. When you hear the words game theory, you probably think of Russell Crowe and Jennifer Connelly from the movie "A Beautiful Mind," which was supposedly about John Nash, the father of game theory. (And yet another American Nobel winner, for those of you keeping score at home.)

Heavy on the romance and melodrama, "A Beautiful Mind" was light on the basics of game theory, which boil down to this: An economic "game" is one where actors make decisions by seeking to maximize the outcomes of situations that depend, in some part, on the decisions made by other actors, who are also seeking to maximize their outcomes. The classic "prisoner's dilemma," for instance, is a situation ripe for the application of game theory.

Mechanism-design theory accepts the ground rules of game theory, but concentrates on finding sets of rules that can help actors maximize outcomes. Consider the following example:

Andy owns a widget and is considering selling it. Donovan would like to buy a widget. That widget carries a specific, but probably different, dollar value for each man. Andy won't sell the widget unless Donovan's value is higher than his. And - here's where the game theory comes in - neither man will tell the other truthfully what his valuation of the widget is. That's because if Andy is honest, Donovan can offer him just $1 more, even if his valuation is much higher; conversely, if Donovan is honest, Andy could accept that amount, even if his valuation is much lower. So we have a conundrum.

It's a general economic principle that private information - that is, stuff you know that other actors don't - is a huge source of inefficiency. Andy and Donovan each have private information about how they value the widget, and although they may be able to haggle out a price, it may not be the optimal price that creates the most net value.

Which is where mechanism-design theory comes in. Using the principles of mechanism-design theory, an economist could study Andy, Donovan and the widget and figure out a method of sale that could get the best deal for both of them. That might entail the use of a Dutch auction (start high and come down until someone bids, or until you hit the seller's minimum acceptable price), or an English auction (start with the lowest acceptable price and work bidders off against one another to jack it up). It might even call for a double-auction, where each party announces its bid/ask price, with the widget to be sold at the point halfway between the two.

Even in this streamlined example, you can see where mechanism-design theory exists all around us as people create systems to help buyers and sellers come together. One of the great mechanism designs of recent years has been iTunes, a system that helped overcome the "private information" at the heart of the music industry: namely, what the songs in the middle of a CD (which were always the hardest to get to hear) sound like and how much an individual values a given piece of music. Unbundling collections of songs and offering them at a uniform, fixed price is an elegant mechanism.

So three cheers for America's latest stud economists. Dismal science? Only for the rest of the world.

Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

Jonathan V. Last is a columnist for the Philadelphia Inquirer. Comment by clicking here.


Previously:

10/25/07 Handicapping the GOP's presidential horse race
10/11/07 Germany's Turks provide a lesson on immigration
09/13/07 British battle can offer us a perspective on casualties
09/12/07 Alas, GOP seems set to take hit in Senate
08/30/07 Europeans have supplanted backbones with capitulation
08/24/07 Politics holds the key to ensuring a healthy growth in population
08/17/07 Finessing the Democratic center
08/10/07 Woohoo! Satire seeing a revival
07/31/07 Historical model: For Obama, it's Carter
07/26/07 Baseball, apple pie, a 2nd chance
07/24/07 Harry Potter and the alchemy theory
07/06/07 Life is hard — and often short. The perils of professional wrestling
06/21/07 After Bush: Gingrich and others worry that his shortcomings could have a far-reaching effect on the GOP
03/09/07 Why the British outclass us in acting
01/23/07 Romney: Seriously great, but with baggage
12/23/06 When truth is transpicuous
12/05/06 A realistic plan: Split the country in two
11/08/06 We could easily pull out of Korea and let China have regional hegemony. But would it be the right thing?
10/24/06 The decline of revolution
10/18/06 Why the free market is king
08/07/06 Democracy, of itself, not solution to all problems
08/01/06 We get the movies we deserve
07/27/06 How long will U.S. empire last?


© 2006, The Philadelphia Inquirer. Distributed by McClatchy-Tribune Information Services.

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