Eric Maskin quotes

Eric Maskin is an American economist recognized for his pioneering work in mechanism design theory. His research has had a profound impact on game theory and the economics of incentives. He was awarded the Nobel Prize in Economics for his contributions to the field. Here are 24 of his quotes:

We investigate how the degree to which credit markets are centralized affects efficiency when there is asymmetric information. Specifically, we argue that decentralization of credit may promote efficient project selection when creditors are not fully informed ex ante about project quality. Our starting point is the idea that, although an entrepreneur (project manager) may have a relatively good idea of her project's quality from the outset, creditors acquire this information only later on, by which time the criteria for profitability may have changed. Thus, a poor project (one whose completion time is too long to be profitable ex ante) may nevertheless be financed, since a creditor cannot distinguish it at the time from a good (quick) project. (Eric Maskin)
How could such industries as software, semiconductors, and computers have been so innovative despite historically weak patent protection? We argue that if innovation is both sequential and complementary-as it certainly has been in those industries-competition can increase firms' future profits thus offsetting short-term dissipation of rents. A simple model also shows that in such a dynamic industry, patent protection may reduce overall innovation and social welfare. The natural experiment that occurred when patent protection was extended to software in the 1980's provides a test of this model. Standard arguments would predict that R&D intensity and productivity should have increased among patenting firms. View quote
Eric Maskin
After society has decided on a social choice rule-a recipe for choosing the optimal social alternative (or alternatives) on the basis of individuals' preferences over the set of all social alternatives-the social planner still faces the problem of how to implement that rule. In particular, the planner may not know individuals' preferences. He might attempt to elicit them, but this may not be an easy task, even abstracting from communication costs. If individuals know the rule by which the planner selects alternatives on the basis of reported preferences, they may have an incentive to report falsely. View quote
Eric Maskin
That strategic rivalry in a long-term relationship may differ from that of a one-shot game is by now quite a familiar idea. Repeated play allows players to respond to each other's actions, and so each player must consider the reactions of his opponents in making his decision. The fear of retaliation may thus lead to outcomes that otherwise would not occur. The most dramatic expression of this phenomenon is the celebrated "Folk Theorem." An outcome that Pareto dominates the minimax point is called individually rational. The Folk Theorem asserts that any individually rational outcome can arise as a in infinitely repeated games with sufficiently little discounting. View quote
Eric Maskin
It's true that my initial training was in mathematics. However, almost by accident, I happened to take a course from Kenneth Arrow on "Information Economics,” which was so inspiring that I decided to change direction. It seemed to me that economics combined the best of both worlds: the rigor of mathematics with the immediate relevance of a social science. As for how much math I would recommend, I'd say that basic analysis, including measure theory, is certainly very useful. Also, linear algebra and stochastic processes always helps. But beyond that, I don't think a huge mathematical investment is necessary to do economic theory unless you are planning to work in an extremely technical area. View quote
Eric Maskin
Perhaps one day earthquakes, hurricanes and financial crashes will all be predictable. But we don't have to wait until then for seismology, meteorology and economics to become sciences; they already are. View quote
Eric Maskin
If budget planning requires gathering information from people who may not always have the incentive to disclose that information, then the principles of mechanism design can definitely be of use in such planning. View quote
Eric Maskin
Through meteorology, we know essentially how hurricanes form, even though we can't say where the next storm will arise. View quote
Eric Maskin
Economic forecasting has actually got pretty good over the years, though admittedly, we don't always get it right. View quote
Eric Maskin
A properly designed tax system can strike a balance between helping the poor and, at the same time, giving people the incentive to work. View quote
Eric Maskin
If banks anticipate government will come to the rescue should the credit market go badly awry, they may make loans that would otherwise be imprudent, e.g. subprime loans with little prospect of repayment. (Eric Maskin)
Many markets work best with little or no outside interference. But others - especially those subject to big 'externalities' - need a helping hand. View quote
Eric Maskin
Much theoretical work, of course, focuses on existing economic institutions. The theorist wants to explain or forecast the economic or social outcomes that these institutions generate. View quote
Eric Maskin
Specifically, in the software industry, progress is highly sequential: progress is typically made through a large number of small steps, each building on the previous ones. View quote
Eric Maskin
Most policy makers embrace a religious-like belief that the market can and should solve every problem. View quote
Eric Maskin
I don't want to make public statements about issues that I have not studied in detail. View quote
Eric Maskin
Markets work well with goods that economists call private goods. View quote
Eric Maskin
The market is no god - it cannot solve every problem. View quote
Eric Maskin
The theory of mechanism design can be thought of as the 'engineering' side of economic theory. View quote
Eric Maskin
Of course, MIT was notable not just for its faculty but also for its students. And, facing such extremely bright kids as a rookie teacher was something like being thrown to the wolves. View quote
Eric Maskin
Prediction is certainly a valuable goal in science, but not the only one. Explanation is also important, and there are plenty of sciences that do a lot of explaining and not much predicting. (Eric Maskin)
In an industry with highly sequential innovation, it may be better for society to scrap patents altogether than try to tighten them. View quote
Eric Maskin
The market doesn't work very well when it comes to public goods. View quote
Eric Maskin
The Nobel Prize is not very important for the winners - they are usually pretty successful people already. But it is valuable as a way of drawing the public's attention to important work in economics. View quote
Eric Maskin