Jean Tirole Wins Nobel Prize in Economic Sciences

This is not my area, so I'll turn the discussion over to others:

• Nobel Prize 2014: Jean Tirole - A Fine Theorem
• Tirole and Pasteur - Digitopoly
• Jean Tirole, Nobel Prize Economics 2014 - Cheap Talk
• Tirole’s Nobel Prize Is a Win for Microeconomic Theory - Justin Wolfers
• Nobel Prize 2014: The Regulator - Lindau Economics
• The 2014 Nobel Laureate in economics is Jean Tirole - Marginal Revolution
• Jean Tirole and Industrial Organization - Marginal Revolution
• Jean Tirole and Platform Markets - Marginal Revolution
• Jean Tirole and Intrinsic and Extrinsic Motivation - Marginal Revolution
• A Nobel Prize for real world economics - The Enlightened Economist
• Economics: The Nobel prize goes to Jean Tirole - The Economist
• Why Jean Tirole’s work matters in the Age of Google - The Guardian
• Jean Tirole Wins Nobel for Work on Regulation - NYTimes.com
• Nobel Prize in Economics Q&A: Why Jean Tirole? - WSJ
• Nobel Prize in Economics: Who Is Jean Tirole? - WSJ
• If you’re not paying for it, you are the market, Nobel edition - FT Alphaville
• Jean Tirole wins Nobel Prize for Economics - FT.com
• Why Jean Tirole the economics Nobel Prize - Vox
• One paper by  Jean Tirole that every internet user should know - Vox
• Nobel for Charles Barkley of Economics - Bloomberg View
• Tirole on why societies resist policy recommendations - Washington Post
• Tirole Helps Explain Huge CEO Bonuses - Business Insider
• Jean Tirole on Energy, Climate, and Environment - CFR

10/14 Update:

• Jean Tirole and the Triumph of Calculated Silliness - Paul Krugman
• A Worthy Economics Nobel for Jean Tirole - John Cassidy
• Tirole told us how to tame the big firms - Lindau Economics
• The Nobel Prize to Jean Tirole - Tim Taylor
• How Jean Tirole’s Work Helps Explain the Internet Economy - NYTimes.com
• Q. and A. With Jean Tirole, Nobel Prize Winner - NYTimes.com

Alumnus Jean Tirole wins Nobel Prize in economic sciences, by Peter Dizikes, MIT News: Jean Tirole PhD ’81, a scholar whose longstanding ties to MIT include service on the economics faculty from 1984 to 1991, has been award the 2014 Nobel Prize in economic sciences for his work on the behavior and regulation of powerful firms.

Research by Tirole, 61, now a professor of economics at the University of Toulouse in his native France, has highlighted the need for regulation to be tailored to individual industries, while creating a general framework for understanding the nuances of regulation across industries.

Tirole received his PhD in economics from MIT in 1981 under the supervision of Eric Maskin, a former MIT professor (now at Harvard University) who was himself a winner of the Nobel Prize in economic sciences in 2007.

Tirole remains an MIT faculty affiliate as the Annual Visiting Professor of Economics in MIT’s Department of Economics. He has co-authored papers with a number of members of the MIT economics faculty, including Olivier Blanchard, Jerry Hausman, Bengt Holmstrom, and Paul Joskow. Tirole and Holmstrom co-authored a 2011 book about liquidity in markets, “Inside and Outside Liquidity.” 

Focus on oligopoly

Many of Tirole’s research advances have involved cases of oligopoly, where a few firms dominate a given industry, controlling the quantity and quality of goods being produced, as well as prices.

“From the mid-1980s and onwards, Jean Tirole has breathed new life into research on such market failures,” the Royal Swedish Academy of Science, which grants the Nobel awards, stated on Monday. “His analysis of firms with market power provides a unified theory with a strong bearing on central policy questions: how should the government deal with mergers or cartels, and how should it regulate monopolies?”

The academy emphasized that its award to Tirole also recognizes many of his findings on regulatory policy, some of which employ game theory and contract theory to describe the dynamics of regulating markets. For instance, regulators may know less than they wish about a firm’s costs and strategic options, so regulators can offer firms a series of options, in essence, regarding the regulatory contract the firm will enter into. It may also make sense, Tirole has concluded, for regulations to be drawn up in recognition of the fact that firms may hide information from regulators.

As the Nobel citation also noted, Tirole observed the potential for phenomena such as the “ratchet effect,” which relates to the timeframe of regulations: If a company does well in a short-term regulatory time frame, regulations may be ratcheted up, lowering the incentives for the firm to perform as well. Alternately, Tirole has suggested, regulators might impose lesser conditions and study their effects. ...