Leonid Hurwicz, who shared the Nobel Prize in economics last year for his work on mechanism design theory, which helps explain the interaction among individuals, markets and institutions, died on Tuesday. He was 90.
The death was confirmed by Mark Cassutt, a spokesman for the University of Minnesota, where Hurwicz was an emeritus professor of economics. He had been undergoing dialysis in a Minneapolis hospital, ‘The Associated Press’ reported.
An early champion of game theory as it applies to mechanism design, he proposed that desired outcomes can be achieved only if people are provided with the right kind of incentives. An example for that is a second-price auction, in which the seller wants bidders to offer their true estimates of the value of the item being auctioned. The highest bidder wins, but pays only the amount offered by the second highest bidder. This is an incentive for bidders to tell the truth without being penalized.
His ideas were further developed by two 56-year-old economists who shared the prize: Roger B. Myerson and Eric S. Maskin. Their work gave economists and policymakers a new way of thinking about how to structure economic incentives and institutions to enhance social welfare.
Hurwicz was born in Moscow to Jewish parents, who had fled from Poland after World War I. The family returned to Warsaw, where he earned a law degree. He then went to the London School of Economics and emigrated to the US in 1940.
Hurwicz, who never actually earned an economics degree, was the oldest person ever to receive a Nobel Prize. ©2008/the New York Times