Eric Maskin on Hayek and Mechanism Design

In 2014, the Mercatus F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics hosted a keynote speech and panel discussion by some of Hayek’s most prominent colleagues and interlocutors to reflect on the significance of Hayek’s Nobel Prize and the various strands of influence his work has had in subsequent decades of scholarship.

In this installment of the series, Dr. Eric Maskin, Professor of Economics at Harvard University, delivers a lecture on the relevance of Hayek to the field of mechanism design. Following the lecture, Dr. Maskin sits down for an interview with Dr. Christopher Coyne to discuss his interest in economics, the state of the discipline, and the impact of Hayek and other mainline thinkers.

Christopher Coyne
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Oct 7, 2020
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A Symposium Celebrating the 40th Anniversary of F.A. Hayek’s Nobel Memorial Prize in Economic Science

September, 2015

The September 2015 issue of the Review of Austrian Economics features a symposium celebrating the 40th anniversary of F.A. Hayek’s Nobel Memorial Prize in Economic Science. The symposium papers were presented at an event hosted by the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center, “40 Years After the Nobel: F.A. Hayek and Political Economy as a Progressive Research Program,” in October 2014.

The symposium includes contributions from distinguished scholars of economics Israel Kirzner, Eric Maskin (Nobel Prize, 2007), Edmund Phelps (Nobel Prize, 2006), and Vernon Smith (Nobel Prize, 2002), exploring the relevance of Hayek’s research program for the past and future of the economics discipline. Also included in this symposium are lecture remarks made by James Buchanan (Nobel Prize, 1986) in 1979 in which Buchanan situates Hayek’s scholarly contributions in the context of the development of economics in the 20th Century. 

The contents are as follows: 

  • Peter Boettke and Christopher Coyne, "Hayek's Nobel after 40 Years"
  • Israel M. Kirzner, "Hayek, the Nobel, and the Revivial of Austrian Economics"
    • This paper re-evaluates the orthodox understanding of the role which the 1974 award of the Nobel Prize in Economics to F.A. Hayek had on the revival of Austrian Economics in the later part of the 20th century. The orthodox view, which focuses exclusively on the sociological role of the award on returning Austrian economists to the conversation among academic economists, omits the critical role of purely doctrinal developments. In particular, the work done in the decade 1937–1948 is argued to be central to the Austrian revival. In this decade, both Hayek and Mises independently developed new clarifications of Austrian thought which represented an extension of the subjectivist tradition in economics: Mises’ emphasis on human entrepreneurial action and Hayek’s exploration of the role of knowledge in the market process. The interest of a generation of younger academics to the ideas developed in that critical decade is thus understood to be the true cause of the Austrian revival, with the award of the Nobel Prize serving a catalytic rather than causative role.
  • Vernon L. Smith, "Discovery Processes, Science, and 'Knowledge-How:' Competition as a Discovery Procedure in the Laboratory" 
    • These edited remarks explore the relationship of the thought of F.A. Hayek to the development of experimental economics and related programs in economic design. Particularly emphasized are the insights of Hayek with respect to competition and their importance to the theoretical justification for, and empirical results derived from, the experimental study of market behavior. These remarks include some personal commentary on experimental methods, from the early double auctions of the 1960s through more recent work exploring the nature of business cycles. Finally, the intellectual history of the market structures examined in Vernon Smith’s work is discussed, comparing the exploration of the double auction to the horse market of Bohm-Bawerk, as well as the general insight of Adam Smith that causality stems from the propensity to truck, barter, and exchange to the discovery of specialization.
  • Eric S. Maskin, "Friedrich von Hayek and Mechanism Design"
    • I argue that Friedrich von Hayek anticipated some major results in the theory of mechanism design.
  • Edmund S. Phelps, "Hayek's New Ideas and Present-Day Ones"
    • This paper reexamines key themes in Friedrich Hayek’s work, including his early macroeconomics and work on overinvestment, as well as his critiques of socialism and corporatism. The paper argues that Hayek’s concern was over economic efficiency rather than innovation. Hayek viewed innovation as exogenous to the business sector, as did Schumpeter. A likely reason for his resistance to innovation as indigenous to the business world was his unease about a theory of the capitalist economy in which the future is indeterminate. Viewing innovation as rare and exogenous helped to minimize the problem of indeterminacy in his economic model. While Hayek’s great ideas will continue to be revered, economic scholarship must now build an economics that gives central place to indigenous innovation in determining a modern economy.
  • James M. Buchanan, "NOTES ON HAYEK - Miami, 15 February, 1979"
    •  This lecture, given by James Buchanan in February of 1979, examines the meaning of F.A.Hayek's career path in the context of the development of economics in the 20th century, and argues for the importance of financial support of scholars like Hayek, and their academic research into the values of a free society.
Find the full issue at SpringerLink.