In various countries around the world, assets that had previously been in the hands of governments were sold off to the private sector in the hope that this would lead to a more efficient allocation, that these assets would be put to better use.
If banks anticipate government will come to the rescue should the credit market go badly awry, they may make loans that would otherwise be imprudent, e.g. subprime loans with little prospect of repayment.
When a bank calls in a loan, it obviously hurts the customer in question. But it also adversely affects other banks that have lent to this borrower. They are now less likely to be repaid and so can't as readily lend to their own customers.
Devising a mechanism is a lot like solving a puzzle - and gives you the same kind of kick.
The theory of mechanism design can be thought of as the 'engineering' side of economic theory.
There is universal consensus among experts that the earth's atmosphere is heating up - and that we are responsible for it by putting carbon dioxide in the atmosphere. We also know that the consequences of global warming are catastrophic. But how do we make sure that all countries reduce greenhouse gases?
Many markets work best with little or no outside interference. But others - especially those subject to big 'externalities' - need a helping hand.
I'm not a housing market expert, and I don't want to pretend to be one.
It wasn't that Harvard was deliberately trying to overwork me, but I think I had a tendency to take on more things out of enthusiasm than were good for me.
Because mechanism designers do not generally know which outcomes are optimal in advance, they have to proceed more indirectly than simply prescribing outcomes by fiat; in particular, the mechanisms designed must generate the information needed as they are executed.
I don't want to make public statements about issues that I have not studied in detail.
I think I have met nearly all the Laureates in Economics. Among the few I haven't met, I suppose I'd most like to meet Ronald Coase because of his legendary power to persuade his colleagues of the validity of the Coase Theorem.
Much theoretical work, of course, focuses on existing economic institutions. The theorist wants to explain or forecast the economic or social outcomes that these institutions generate.
In an industry with highly sequential innovation, it may be better for society to scrap patents altogether than try to tighten them.