Friday, October 07, 2005

Nobel Prize Possibilities

The 2005 Nobel Prize in Economics is scheduled to be announced on Monday.

The top candidate whose work I am most familiar with is Oliver Williamson in contract/transaction cost theory.

Here is a link to an actual betting market that they had for the 2004 Nobel Prize in Economics (it has not been updated for 2005). You could buy shares in an economist and then you win a share of the proceeds if that economist wins the Nobel prize (it did actually predict the winner last year).

Sadly, my teaching of high school economics and "groundbreaking" work in the area of paper footballs and paper airplanes is once again likely to be overlooked by the Nobel committee...

Automatic bonus points for any of my students that can look up and give a quick summary of Williamson's contribution to the field of economics (in your own words, not copied directly from somewhere of course).


Brian Zabell said...

Basically his background is that he is a big expert of transaction economics.

Transaction cost is the cost made in any ecomomic exchange. In the simplest terms, you can buy milk from the store, but you aren't just buying the milk; you're buying the milk, waiting in line, and driving home.

People must make rational decisions when making a transaction because there are many costs associated with any transaction, and that is where transaction economics originates.

Coase has been acknowledged of introducing the idea of transaction economics to extent, but Oliver Williamson is instead credited for it because of his massive work regarding transaction cost theory, a theory where abstract costs affect economic decisions.

Michael Arjona said...

The summary of Williamson's contributions needs to be more about what his actual ideas were, not the fields that he worked in. Brian's answer is part of it (he describes the field that he is credited with founding), but we need more here about what his ideas are. I have erased the answers that don't qualify.

Anonymous said...

Oliver E. Williamson believes that transaction costs lead to deadweight loss and a decrease in efficiency.

Williamson goes against many economist from the University of Chicago by believing that rationality is bounded. He believes this becuase people who make decisions only have a certain amount of memory and other tools which are used for gathering and converting information.
-Kristen Henderson