Nobel economist's research deals with hot-button issues

13th October 2014, Comments 0 comments

Nobel Prize-winning economist Jean Tirole, hailed as "one of the most influential economists of our time", has worked on game theory, oligopolies and the power of large companies and published research on topics that make international news on a regular basis.

A lot of the Frenchman's research has focused on motivation and salary, with regard to large companies and the rise in pay among the top tiers of leadership -- like Wall Street chief executives.

The issue of executive pay exploded in September 2011, with the Occupy Wall Street movement, where one of the central issues was the high salaries and bonuses that CEOs and executives were earning in comparison with lower-ranking employees.

Tirole has also written on climate change talks, and the strategic implications of delayed negotiations.

Several of his publications have focused on the international climate change agreement known as the Kyoto Protocol, and governments' reluctance to reach an agreement, which ultimately hurts everyone involved.

Another reason that Tirole won the Nobel was his research on government handling of major enterprises.

According to the Nobel jury, Tirole's work has provided a framework for formulating policies surrounding a number of industries.

In November 2011, Tirole, along with Princeton economist Roland Benabou wrote a paper published by US think-tank the National Bureau of Economic Research, titled "Laws and Norms," which looks at how laws impose material incentives and send messages about societal values.

But his Nobel Prize came for his work on oligopoly and game theory.

An oligopoly is a state of limited competition, a popular example being the cellular companies Verizon, AT&T, Sprint and T-Mobile, which together control around 90 percent of the market. A monopoly, on the other hand, is the dominance of one seller in the market.

Game Theory is the study of how strategic interactions affect an outcome and has applications ranging from psychology to computer science.

Other prominent game-theorists to win the Nobel Prize in Economics include the trio who won the 1994 prize: John Nash, John Harsanyi, and Reinhard Selten.

Nash, a prominent mathematician who suffers from schizophrenia, was the subject of the Academy Award winning film "A Beautiful Mind," starring Russell Crowe.

© 2014 AFP

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