He was recognized for his contributions to mechanism design theory, initiated by co-winner Leonid Hurwicz of the University of Minnesota, and which Myerson further developed with others, including co-winner Eric Maskin of the Institute for Advanced Study, another recipient of the 2007 Nobel Memorial Prize in Economics. Hurwicz was a researcher with the Cowles Commission from 1950 to 1955 when it was located at the University of Chicago.
The theory allows for people to distinguish situations in which markets work well from those in which they do not. It has helped economists identify efficient trading mechanisms, regulation schemes and voting procedures. Today, mechanism design theory plays a central role in many areas of economics and parts of political science.
“The theory of mechanism design seeks to understand how resources can be allocated in socially effective ways, even when the information needed to perform the task is spread among many individuals,” said Phil Reny, Chair of Economics.
“An effective mechanism provides those individuals with incentives to reveal their information truthfully so that the desired allocation can be implemented. Roger Myerson made a path-breaking contribution to the theory of mechanism design when he discovered a fundamental connection between the allocation to be implemented and the monetary transfers needed to induce informed agents to reveal their information truthfully.
“Myerson’s fundamental theorem, now called the revenue equivalence theorem, forms a crucial part of a vast literature on mechanism design and is used especially heavily in the design of auctions. It is now impossible to work in the field of mechanism design without a thorough understanding of Myerson’s result,” he added.
Myerson is the Glen A. Lloyd Distinguished Service Professor in Economics and the College, and Myerson has made seminal contributions to the fields of economics and political science. In game theory he introduced a refinement of Nash’s equilibrium concept, called “proper equilibrium.” He has applied game theoretic tools to political science to study and compare electoral systems, and he also developed fundamental ideas of mechanism design, such as the revelation principle and “revenue-equivalence theorem.”
Myerson also has developed computer software for auditing formulas and for simulation and decision analysis for use with Microsoft spreadsheet software.
He is the author of Game Theory: Analysis of Conflict (1991) and Probability Models for Economic Decisions (2005). Myerson also has published numerous articles in Econometrica, Mathematics of Operations Research and the International Journal of Game Theory, for which he served as an editorial board member for 10 years.
During his 25-year tenure at Northwestern University, Myerson twice served as a Visiting Professor in Economics at Chicago. He joined the Chicago faculty in 2001.
He received his A.B., summa cum laude, and S.M. in applied mathematics in 1973 from Harvard University and a Ph.D., also in applied mathematics, from Harvard University in 1976.
Click images to download high-resolution versions. All images by Lloyd DeGrane on Monday, Oct. 15.
Lower middle image: Nobel Prize winners (from left) James Heckman, Roger Myerson, Gary Becker and Robert Lucas (all current University faculty members); lower right image: The winner’s son (Daniel Myerson) and wife (Gina Myerson)