Samuel Bowles, Wendy Carlin, 07 September 2017

Our intro courses fail to reflect the dramatic advances in economics – concerning information problems and strategic interactions, for example – since Samuelson’s paradigm-setting 1948 textbook. Missing, too, is any sustained engagement with new problems we now confront and on which economics has important insights for public policy – climate change, innovation, instability and growing inequality amongst them. This column introduces a free online interactive text – now used as the standard intro at UCL, Sciences Po, and Toulouse School of Economics – which responds.

Roberto Bonfatti, Kevin O'Rourke, 26 May 2017

Classical models suggest that shifts in the balance of power can lead to conflict, where the established power has the incentive to trigger war to deter the threat to its dominance. This column argues that this changes if international trade is taken into account. Industrialisation requires the import of natural resources, potentially leading a smaller nation to trigger war either against a resource-rich country or the incumbent nation. The model can help explain the US-Japanese conflict of 1941 and Hitler’s invasion of Poland, and has implications for US-Chinese relations today.

Rajiv Sethi, 22 January 2017

Thomas Schelling, game theorist and co-recipient of the 2005 Nobel Memorial Prize in Economic Sciences, passed away in December 2016 at the age of 95. This column explores how his lack of concern with professional methodological norms allowed him to generate new knowledge with great freedom, and to make innovations in method that may end up being even more significant than his specific insights into economic and social life.

Glenn Loury, 22 January 2017

The late Thomas Schelling’s 1960 classic, The Strategy of Conflict, opened up new vistas in the then emergent field of game theory. This personal tribute by a longstanding friend and colleague describes how Schelling’s creative and playful mind, his incredible breadth of interests, and his unparalleled mastery of strategic analysis opened up a new world of intellectual possibilities.

Kai Konrad, Tim Stolper, 22 November 2016

The reasons why a country would comply with international standards of transparency in the face of sizeable returns in the tax haven business are unclear. This column highlights fundamental coordination problems in the fight against offshore secrecy regimes and their implications for optimal policies, and explores whether the fight will be successful or not.

Benny Moldovanu, Axel Ockenfels, 14 September 2016

Reinhard Selten, co-recipient of the 1994 Nobel Memorial Prize in Economic Sciences, passed away in August. This column outlines the intellectual life and career of a pioneering analyst of strategic interaction of both fully rational players (game theory) and real human beings with ‘bounded rationality’ (experimental economics). Selten called himself a ‘methodological dualist’, making a sharp distinction between normative game theory and descriptive theories of social and economic interaction. Nobody else has made such substantial and important contributions to both lines of research.

Santosh Anagol, Vimal Balasubramaniam, Tarun Ramadorai, 17 July 2016

Evidence of the ‘endowment effect’ – ownership of an asset changing one’s valuation of it – runs counter to standard microeconomic theory. This column uses evidence from the Indian stock market’s random allocation of shares in IPOs to show that endowment effects do occur in even outside of controlled experiments, and correlate highly with measures of market experience. This evidence suggests that agents’ inertial behaviour explains endowment effects better than standard explanations.

Ariel Pakes, 20 June 2016

A key task for economists is predicting how markets will respond to complex changes in environment. This column discusses recent empirical developments that allow for a deeper understanding of such market dynamics. Game theory has informed conditional pricing models that take account of products marketed and their production costs. Likewise, dynamic models of productive efficiency allow for analyses of the role of market structure in inducing competitive efficiencies.

Alvin Roth, 06 April 2016

Lloyd Shapley, game theorist and co-recipient of the 2012 Nobel Memorial Prize in Economic Sciences, passed away in March. This column, by the economist with whom he shared the Nobel, outlines Shapley’s intellectual life and career, which was among the most fertile of the 20th century. Shapley made fundamental contributions to the analysis of both cooperative and non-cooperative games. Some of his foundational ideas have led to the study of matching markets and to the thriving branch of practical economics known as ‘market design’.

Ginger Jin, Michael Luca, Daniel Martin, 22 July 2015

Theories of voluntary disclosure suggest that even when disclosure is voluntary, market forces can drive firms to completely reveal information about their quality. This column investigates these predictions in an experimental setting. Laboratory results suggest widespread failures of the theoretical predictions – senders do not fully disclose, and receivers are not fully sceptical about non-disclosure. This suggests a role for policymakers to help customers understand the sound of silence.

Kevin Bryan, 27 May 2015

John Nash passed away this week. This column pays tribute to a mathematician whose contributions to economics are enormously influential.

Dmitry Dagaev, Konstantin Sonin, 10 October 2013

The rules of sports are complex and involve the interaction of many self-interested agents. This column uses game theory to analyse the rules of the qualification tournament in the UEFA zone for the 2014 FIFA World Cup. It shows that cases could arise where a team would have to avoid winning to advance. It also lays out the general intuition for thinking about how rules misalign incentives in sport tournaments.

Robert Aumann, 09 September 2011

Nobel laureate Robert Aumann of the Hebrew University of Jerusalem talks to Romesh Vaitilingam about his work on ‘rule rationality’, the development of game theory and its potential for understanding conflict – from the Pax Romana to the modern day Middle East. The interview was recorded in August 2011 at the Fourth Lindau Meeting on Economic Sciences, which brought together 17 of the 38 living economics laureates with nearly 400 top young economists from around the world. [Also read the transcript]

Avinash Dixit, 28 August 2009

Avinash Dixit of Princeton University talks to Romesh Vaitilingam about game theory in economics: its emergence and development after the Second World War, particularly from the 1970s onwards; its applications in business, public policy and daily life; and the future research agenda. The interview was recorded in Princeton in August 2009.

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