Eric Maskin, Albert O. Hirschman Professor of Social Science at the Institute for Advanced Study and Nobel Memorial Prize Winner in Economic Sciences will speak to the Princeton Regional Chamber of Commerce on Thursday, January 8, at the Princeton Marriott Hotel. His subject: “Financial Crises, Why they occur and what to do about them.” The Chamber’s first Monthly Membership Luncheon of the New Year will begin at 11:30 a.m. with registration and networking at 11:30 a.m. followed by the program at noon, adjourning at 1:30 p.m. Cost to attend is $40 for Chamber members; $50 for non-members and walk-ins. Reservations in advance are required and can be made at www.princetonchamber.org or by calling 609-924-1776.
While the new administration wrestles with the biggest set of economic problems since 1929, Dr. Maskin suggests that economic theory can contribute to the solutions. Maskin won the Nobel Prize in 2007, along with two colleagues, for a theory called ‘mechanism design.’
“Most of economics is an attempt to look at economic events and try to understand why they happened, and also to try to predict economic events in the future. But what I do in mechanism design is, in a sense, the reverse of that,” he says. “We start with the outcome we want – a social goal we want to achieve. The question is, how can we build a mechanism – a procedure, an institution, a game – which will lead to this outcome? What kind of incentives should society provide so that, even though individuals act in their own interest, the goal can be achieved?” Sometimes the mechanism should be government regulation.
Individuals and banks, he believes, are less to blame for the financial failure than government, which failed to regulate the mortgage loans.
A New Jersey native, the 58-year-old Maskin earned his AB and PhD degrees from Harvard, studied at the University of Cambridge, and taught at Harvard and MIT. In 2000 he came to the Institute for Advanced Study to be the Albert O. Hirschman Professor of Social Science and a visiting lecturer with the rank of professor at Princeton University. He is the third Nobel Prize winner to live, with his family, in the Mercer Street house formerly occupied by Albert Einstein.