Robert Aumann and Thomas Schelling: Conflict and cooperation through the lens of game theory

The Prize in Economic Sciences 2005: supplementary information to press release. Robert Aumann and Thomas Schelling have contributed to enhancing our understanding of conflict and cooperation. They have achieved this by extending and applying game theory â a method used to analyze strategic interaction among different agents. Their work has transformed the social sciences far beyond the boundaries of economics. AumannâÂÂs and SchellingâÂÂs research continues to shape the debate on the formation of social institutions.Game Theory; Conflict; Cooperation

George A. Akerlof, A. Michael Spence, Joseph E. Stiglitz: Markets with Asymmetric Information

Akerlof, Spence and Stiglitz's analyses form the core of modern information economics. Their work transformed the way economists think about the functioning of markets. The analytical methods they suggested have been applied to explain many social and economic institutions, especially different types of contracts. Other researchers have used and extended their original models to analyze organizations and institutions, as well as macroeconomic issues, such as monetary and employment policy.Asymmetric information;

Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson: Mechanism Design Theory

Scientific Background, The Nobel Prize in Economic Sciences 2007. Economic transactions take place in markets, within firms and under a host of other institutional arrangements. Some markets are free of government intervention while others are regulated. Within firms, some transactions are guided by market prices, some are negotiated, and yet others are dictated by management. Mechanism design theory provides a coherent framework for analyzing this great variety of institutions, or "allocation mechanisms", with a focus on the problems associated with incentives and private information.Mechanism Design; Asymmetric Information

Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides: Markets with Search Frictions

Scientific Background on the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009 compiled by the Economic Sciences Prize Committee of the Royal Swedish Academy of SciencesSearch frictions;

Thomas J. Sargent and Christopher A Sims: The art of distinguishing between cause and effect in the macroeconomy

How are GDP and inflation affected by a temporary increase in the interest rate or a tax cut? What happens if a central bank makes a permanent change in its inflation target or a government modifies its objective for budgetary balance? This year’s Laureates in economic sciences, Thomas J. Sargent and Christopher A. Sims, have developed methods for answering these and many other questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments.Causation; macroeconomics

Thomas J. Sargent and Christopher A. Sims: Empirical Macroeconomics

One of the main tasks for macroeconomists is to explain how macroeconomic aggregates -such as GDP, investment, unemployment, and inflation- behave over time. How are these variables affected by economic policy and by changes in the economic environment? A primary aspect in this analysis is the role of the central bank and its ability to influence the economy. How effective can monetary policy be in stabilizing unwanted fluctuations in macroeconomic aggregates? How effective has it been historically? Similar questions can be raised about fiscal policy. Thomas J. Sargent and Christopher A. Sims have developed empirical methods that can answer these kinds of questions. This year's prize recognizes these methods and their successful application to the interplay between monetary and fi scal policy and economic activity.Causation; macroeconomics

Foundations of Behavioral and Experimental Economics: Daniel Kahneman and Vernon Smith

Advanced information on the Prize in Economic Sciences 2002. Until recently, economics was widely regarded as a non-experimental science that had to rely on observation of real-world economies rather than controlled laboratory experiments. Many commentators also found restrictive the common assumption of a homo oeconomicus motivated by self-interest and capable of making rational decisions. But research in economics has taken off in new directions. A large and growing body of scientific work is now devoted to the empirical testing and modification of traditional postulates in economics, in particular those of unbounded rationality, pure self-interest, and complete self-control. Moreover, today's research increasingly relies on new data from laboratory experiments rather than on more traditional field data, that is, data obtained from observations of real economies. This recent research has its roots in two distinct, but converging, traditions: theoretical and empirical studies of human decision-making in cognitive psychology, and tests of predictions from economic theory by way of laboratory experiments. Today, behavioral economics and experimental economics are among the most active fields in economics, as measured by publications in major journals, new doctoral dissertations, seminars, workshops and conferences. This year's laureates are pioneers of these two fields of research.behavioral economics; experimental economics

Paul Krugman: Trade and Geography - Economies of Scale, Differentiated Products and Transport Costs

Scientific Background, The Nobel Prize in Economic Sciences 2008. Over the centuries, international trade and the location of economic activity have been at the forefront of economic thought. Even today, free trade, globalization, and urbanization remain as commonplace topics in the popular debate as well as in scholarly analyses. Traditionally, trade theory and economic geography evolved as separate subfields of economics. More recently, however, they have converged become more and more united through new theoretical insights, which emphasize that the same basic forces simultaneously determine specialization across countries for a given international distribution of factors of production (trade theory) and the long-run location of those factors across countries (economic geography).Trade; Geography;

Finn Kydland and Edward Prescott's Contribution to Dynamic Macroeconomics: The Time Consistency of Economic Policy and the Driving Forces Behind Business Cycles

Advanced information on the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, 2004Business Cycles; Time Consistency

The Scientific Contributions of James Heckman and Daniel McFadden

Advanced Information. Microeconometric research is concerned with empirical analysis of the economic behavior of individuals and households, such as decisions on labor supply, consumption, migration or occupational choice. Microeconometric methods are equally relevant in studies of individual firms, for example their production and employment decisions. Over the last several decades, significant breakthroughs in empirical microeconomic research have been triggered by innovations in microeconometric methods and by greater availability of new types of data. The raw material in microeconometric research is microdata, where the units of observation are individuals, households or firms. Microdata appear as cross-section data and, to an increasing degree, as longitudinal (panel) data.Microeconometrics