2008 Thomson Prediction in Nobel Prize in Economics

Thomson Scientific predicts the 2008 Nobel Prize this year. In economics, three groups of preeminent scholars seem to win the titile this year. They are:

Group 1
LARS P. HANSEN, Homer J. Livingston Distinguished Service Professor, Department of Economics, University of Chicago, Chicago, IL USA
and
THOMAS J. SARGENT, William R. Berkley Professor of Economics and Business, Department of Economics, New York University, New York, NY, USA; and Senior Fellow, Hoover Institution, Stanford, CA USA
and
CHRISTOPHER A. SIMS , Harold B. Helms Professor of Economics and Banking, Department of Economics, Princeton Univeristy, Princeton, NJ USA
"for their contributions to dynamic econometric models"

Group 2
MARTIN S. FELDSTEIN, George F. Baker Professor of Economics, Department of Economics, Harvard University, Cambridge, MA USA; President Emeritus, National Bureau of Economic Research, Cambridge, MA USA
"for his research on public economics, including taxation, social security, health economics and many other topics"

Group 3
ARMEN A. ALCHIAN, Emeritus Professor, Department of Economics, University of California Los Angeles, Los Angeles, CA USA
and
HAROLD DEMSETZ, Arthur Andersen UCLA Alumni Emeritus Professor of Business Economics, Department of Economics, University of California Los Angeles, Los Angeles, CA USA
"for their publications on property rights and their contributions to the theory of the firm"

There are many other nominees who have very high academic citations and are still in the running for the Nobel title. They are ROBERT J. BARRO; EUGENE F. FAMA AND KENNETH R. FRENCH; PAUL MICHEAL ROMER; RICHARD H. THALER; JAGDISH N. BHAGWATI AND AVINASH K. DIXIT AND PAUL KRUGMAN; DALE W. JORGENSON; OLIVER D. HART AND BENGT R. HOLMSTROM AND OLIVER E. WILLIAMSON; ELHANAN HELPMAN AND GENE M. GROSSMAN; JEAN TIROLE; ROBERT B. WILSON AND PAUL R. MILGROM.

Let's see!

Still on GM and Fisher???

Organizations and Markets just has another post (see the first one here) on yet another round of debate over the acquisition of Fisher Body by General Motors. It's a classic case, particularly in the analysis of vertical integration when parties face high asset specificity.

The new issue of Industrial and Corporate Change has two more papers, “Lawyers Asleep at the Wheel? The GM–Fisher Body Contract” by Victor Goldberg and “The Enforceability of the GM–Fisher Body Contract: Comment on Goldberg” by Ben Klein. Apparently, the debate will still go on.

I think this case and the idea of asset specificity have already become a standard in Transaction Cost Economics and even in the recent advancement of Incomplete Contract Framework. When I ask him to make some comments on these recent debates, Harvard Prof. Oliver Hart just replied, "I wish that we could get beyond this case! Relationship specific investments have got to be an important factor in determining the costs and benefits of vertical integration, even though there may be many others!"

Map of Scientific Paradigms

See here. (Transaction cost, firm size, innovation etc. are somewhere in the 9 o'clock area.)

This map "was constructed by sorting roughly 800,000 scientific papers into 776 different scientific paradigms (shown as red and blue circular nodes) based on how often the papers were cited together by authors of other papers. Links (curved lines) were made between the paradigms that shared common members, then treated as rubber bands, holding similar paradigms closer to one another when a physical simulation forced them all apart: thus the layout derives directly from the data. Larger paradigms have more papers. Labels list common words unique to each paradigm"

Time to dump Word??

Microsoft Word is pervasively used to write ordinary documents and academic papers, because it is easy to operate and you will see what you will get. But if you are going to deal with much more sophisticated mathematical equations, LaTex may become a better choice. But with LaTex, you cannot simply get what you see (maybe sometimes if you want to insert, say, a table, it would be difficult for you to define the specific attributes of the table unless you become very experienced).

What if we combine the merits of Word and LaTex? Then here comes Lyx (also see here). Most of the time, the quasiconcavity of preference relations will hold.

So is it the time to dump Word??

Hat tip to a friend of mine.

A little bit diverting...but interesting posts

From NewScientist:

1. Why preschool is more than just child's play?
2. Do we need help making sensible decisions?
3. Eight facts about Cold; and
4. Are happy kids dumb kids?

Shiller on housing and bubbles

Robert Shiller of Yale University had a conversation with Econtalk host Russ Roberts, in which he argues that the current housing and related financial market problems are much due to speculative fervor in the past (here for audio). He also had an interview with Princeton University Press, talking about his new book, The Subprime Solution (see here and here).

What's new in econometrics?

See the 2007 Summer Institute mini-course organized by NBER and all the related video files.

Nobel Symposium on Foundations of Organization

Stockholm School of Economics hosted the Nobel Symposium on Foundations of Organization on August 28 and 29. Many prominent figures in economics, business administration and sociology have taken part in this symposium. Papers, slides and discussions can be found on this page. Interestingly, MIT prof. Robert Gibbons presented a SEVENTY-EIGHT page long paper on Economic Theories of Internal Organization, in which he tries to present an integrated framework on the internal structures and processes of an organization by combining insights from economics, sociology, politics and business strategy. Although it's huge, it is worth a read!

Update (Dec. 16, 2009): the former links to this program were broken, and now they are all fixed. Thanks to James Yen for the pointer!

For fun...

A friend told me today that there are lots of jokes on Prof. Sergiu Hart's homepage.

Nudge

Chicago Economist Richard Thaler and his colleague Cass Sunstein of Law School have written a new book, "Nudge: Improving Decisions About Health, Wealth, and Happiness". (also see here.)

Using vivid examples from the most ordinary but important aspects of life (like the way to layout different kinds of food in cafeteria, the way to avoid car accident at a sharp turn, etc.), Thaler and Sunstein show that by knowing how people think, we can actually design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. They demonstrate how thoughtful "choice architecture" can be established to nudge us in beneficial directions without restricting freedom of choice.

Here is a video lecture from Richard Thaler, talking about the whole idea inside this book. You can also read this review from Harvard Economist Benjamin Friedman.

Top 11 Unsolved questions in Economics???

Like there are lists of unsolved problems in Mathematics, Physics, and Chemistry, Wikipedia also has a list of the 11 unsolved questions in economics. Sounds interesting? Take a look.

1. What caused the Industrial Revolution?
2. What is the proper size and scope of government?
3. How can heterogeneous production goods be included in a mathematically trackable intertemporal equilibrium constrution?
4. What truly caused the Great Depression?
5. Can we explain the Equity Premium Puzzle?
6. How is it possible to provide causal explanations using the purely logical constructions of mathematical economics?
7. Can we create an equivalent of Black-Scholes for futures contract pricing?
8. What is the microeconomic foundation of inflation?
9. Is the money supply endogenous?
10. How does price formation occur? Why do some markets achieve Pareto efficiency?
11. What causes the variation of income among ethnic groups?

I think some problems are quite solid (like the one on the size and scope of government, maybe more generally, organizations and institutions, also the other on EPP) therefore need careful investigation, but some of them, particularly those problems on causalities (one of them should be listed on unsolved problems in philosophy), are really too broad and too hard to tackle.

Hat tip to Mike Moffatt.

How to raise a PhD?

OrgTheory has the answer...

Derman...the Quant

I suggested everyone who is interested in modern finance theory read two books (now three), one is Capital Ideas (and now Capital Ideas Evolving) by Peter L. Bernstein, who is the former editor of the Journal of Portfolio Management and the founder and president of Peter L. Bernstein, Inc; the other is My Life as A Quant, by Emanuel Derman, now the director of Columbia University's program in financial engineering.

Recently, Prof. Derman spoke with Science & the City on how a theoretical physicist can find his own way and made a mark on Wall Street.

Poterba and Feldstein

Two recent interviews from Bloomberg.

The NBER new head, James Poterba of MIT talks about the micro perspective on asset and credit markets, possible retrenching of U.S. consumers, and also on the characteristics of Harvard and MIT's economics departments.

His predecessor, Martin Feldstein of Harvard talks about the current macroeconomic condition. He says that Fed is slow to recognize the credit crisis.

Hal Varian on Technology

What is the role of technology in everyday lives? Can we predict the paths of innovation? What can economists contribute in this technology driven era? Hal Varian, Google's Chief Economist and UC Berkeley Professor has his own thoughts.