American economists get Nobel Prize in Economics for market design

American economists get Nobel Prize in Economics for market design
Alvin Roth and Lloyd Shapley have been awarded the Nobel Prize in Economics for the theory that helps explain the market processes when doctors are assigned to hospitals, students to schools and human organs for transplant recipients.

“Despite the researchers working independently, a combination of Shapley’s basic theory and Roth’s empirical tests brought real fruit and improved operations in many market fields,” the Academy said.

While Shapley was responsible for the theoretical part of the study, Roth took it further by applying it to the market for US doctors.

Roth, 60, is a professor at Harvard University in Boston. Shapley, 89, is a professor emeritus at University of California Los Angeles.

The general expectation was that Robert Schiller from the Yale University would take the prize from the Swedish committee for his input into the theory of volatility in financial markets. The economist managed to forecast the bubble bursting in the US housing market.

The prize is worth 8 million Swedish kronor, or about $1.2 million. It was cut from the previous $1.4mln, as the Stockholm-based Nobel Foundation reduced the value of the 2012 prize due to the crisis.

The Nobel Memorial Prize in Economic Sciences was the last of the 2012 Nobel awards to be announced.

Last year's economics prize went to US economists Thomas Sargent and Christopher Sims for describing the cause-and-effect relationship between the economy and government policy.

The US remains at the forefront of economic research, as its scientists have received 47 of the 70 prizes awarded. Leonid Kantarovich was the only Soviet economist and remains the only modern Russian to be awarded the Nobel Prize. In 1975 he was recognized for his input into the theory of optimal resources distribution.

Russian economist could get the prize once again in about 15 – 20 years, with economic research in Russia developing strongly since the turn of the century, Andrey Yakovlev, a director at the Institute for Enterprises and Markets Analyses at the High School of Economics, told RBC.

“Russia has so far been under a certain influence of the Soviet period, when we had economics as an ideological science and there were quite strong limitations on independent research,” Yakovlev explained.

American Elinor Ostrom remains the only woman awarded the Nobel Prize in 2009, when she shared the award with Oliver E. Williamson, for "her analysis of economic governance, especially the commons."

The economics prize was not among the original prizes established in the will of Alfred Nobel, a Swedish industrialist also known for inventing dynamite. It was created by the Swedish central bank in Nobel's memory in 1968, and has been handed out with the five other prizes ever since.