Note: This is the second consecutive year the Nobel for economic sciences has gone to UC Berkeley economists and the third time in the past seven years. Economists from the College of Letters & Science and the Haas School of Business have won or shared four of the 18 Nobel Prizes awarded faculty at the University of California, Berkeley since 1939.
George A. Akerlof, professor of economics, shares the prize for his landmark research in asymmetrical information in the market for "lemon" used cars. Akerlof showed how the market gets crowded out when sellers and buyers operate on different information. The work has influenced areas as diverse as health insurance for the elderly and labor-market discrimination of minorities.
Daniel McFadden, professor of economics, shared the prize for his development of statistical tools that measure individual decision-making. Such tools are used to study the factors that influence decisions as diverse as choosing whether to take public transportation or drive, which college to attend, where to buy a house and which job to accept.
John C. Harsanyi, professor of economics and business administration, shared the prize for his pioneering work in game theory. Harsanyi, who died last year, developed the theory that combines human behavior apparent in games such as chess and poker with mathematics to predict real-world problems. The theory has influenced areas such as arms control, interest-rate policy, trade negotiations and other circumstances in which parties operate on incomplete information.
Gerard Debreu, emeritus professor of economics and mathematics, won the prize for applying mathematical rigor to the fundamental theory of supply and demand in economics. The law of supply and demand dates back to the 18th century, but Debreuís mathematical models provided proof of how prices affect the supplies of goods bought and sold.