Questions what is the main features of the socialist economy?

Five Nobel Prize-Winning Economic Theories?

Key words: Elinor Ostrom, behavioral economics, Asymmetric Information, Game theory

Answer:

1. Management of Common Pool Resources

In 2009, Indiana University political science professor, Elinor Ostrom, became the first woman to win the prize. She received it "for her analysis of economic governance, especially the commons." Ostrom's research showed how groups work together to manage common resources such as water supplies, fish, lobster stocks, and pastures through collective property rights. She showed that ecologist Garrett Hardin's prevailing theory of the "tragedy of the commons" is not the only possible outcome, or even the most likely outcome when people share a common resource.

2. Behavioral Economics

The 2002 prize went to psychologist Daniel Kahneman "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty." Kahneman showed that people do not always act out of rational self-interest, as the economic theory of expected utility maximization would predict. This concept is crucial to the field of study known as behavioral finance.

Kahneman conducted his research with Amos Tversky, but Tversky was not eligible to receive the prize because he died in 1996 and the prize is not awarded posthumously.

3. Asymmetric Information

In 2001, George A. Akerlof, A. Michael Spence, and Joseph E. Stiglitz won the prize "for their analyses of markets with asymmetric information." The trio showed that economic models predicated on perfect information are often misguided because, in reality, one party to a transaction often has superior information, a phenomenon known as "information asymmetry."

4. Game Theory

The academy awarded the 1994 prize to John C. Harsanyi, John F. Nash Jr., and Reinhard Selten "for their pioneering analysis of equilibria in the theory of non-cooperative games." The theory of non-cooperative games is a branch of the analysis of strategic interaction commonly known as "game theory." Non-cooperative games are those in which participants make non-binding agreements. Each participant bases his or her decisions on how he or she expects other participants to behave, without knowing how they will actually behave.

5. Public Choice Theory

James M. Buchanan Jr. received the prize in 1986 "for his development of the contractual and constitutional bases for the theory of economic and political decision-making." Buchanan's major contributions to public choice theory bring together insights from political science and economics to explain how public-sector actors (e.g., politicians and bureaucrats) make decisions. He showed that, contrary to the conventional wisdom that public-sector actors act in the public's best interest (as "public servants"), politicians and bureaucrats tend to act in their own self-interest, just like private-sector actors (e.g., consumers and entrepreneurs). He described his theory as "politics without romance."

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