4 Economic Theories that Bagged the Nobel Prize
If you have been looking for advanced economics theories, you have arrived at the right place. Most students avail fast essay writing service when they are unable to select economics topics. But once you go through this blog, you will have an insight into economical aspects.
The topics mentioned below have
1. Behavioral Economics
The 2002 award went to Daniel Kahneman, a psychologist. Kahneman demonstrated that, as the economic theory of expected utility maximization would predict, individuals do not always behave out of reasonable self-interest. This notion is important for the area of research known as behavioral finance. Kahneman and Tversky have established common cognitive biases that lead people to make unreasonable choices using defective reasoning. The anchoring impact, the planning fallacy, and the illusion of power are part of these biases.
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2. Assymetric Information
In 2001, A. Michael Spence, George A. Akerlof, and Joseph E. Stiglitz won the prize for their work on Assymetric Information. The trio showed that economic models centered on perfect data are sometimes misguided since one party to a transaction often has superior data, a phenomenon known as “information asymmetry.” The study by Spence focused on signaling, Stiglitz demonstrated do my homework how by providing varying combinations of deductibles and premiums, insurance firms would learn which consumers are at greater risk of incurring high expenses (a method he named “screening”).
3. Game Theory
In 1994, the prize was awarded to John F. Nash Jr., John C. Harsanyi, and Reinhard Selten for their work on theory of non-cooperative games. In these ‘games’, the parties make non-binding agreements. employee case study Without understanding how they would actually behave, each participant bases his or her decisions on how he or she expects other participants to behave. The Nash Equilibrium was one of Nash’s major contributions.
Selten applied Nash’s results to complex strategic relationships, and Harsanyi applied them to incomplete information scenarios. You get to see the concepts in the form of oligopoly analysis and industrial organization theory.
4. Management of Common Pool Resources
Elinor Ostrom, in 2009, won the prize for her research on ‘economic governance, especially the commons’. Her research shows how communities work together to manage shared resources through mutual property rights, such as pastures, lobster, fish, water supplies, etc. She opined that resources can be collectively managed, without government interference, provided people using the resource are physically close to it and have a relationship with each other.
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