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Laudatio de Luis Corchón

Laudatio de Luis Corchón

Eric Stark Maskin was born in New York on December 12, 1950, into a family with a deep interest in music (his mother was a pianist and his father, who was also a doctor, played the violin). He grew up in Alpine, a small village on the banks of the river Hudson just opposite Yonkers. He graduated from Harvard University with a major in Mathematics and later earned a Ph.D. in Applied Mathematics (essentially mathematical economics) under the direction of Kenneth Arrow (1972 Nobel Prize winner). There, he shared a classroom with other prominent economists like Roger Myerson (with whom he shared the Nobel prize in 2007) and Jean Jacques Laffont (died in 2004).

He has been a frequent visitor to the University of Cambridge, where he interacted with Frank Hahn and Partha Dasgupta, both of whom were my teachers at the LSE and to whom I owe a good part of my education. Later, he taught at MIT where he often shared meals with Paul Samuelson, Robert Solow and Franco Modigliani (all of them Nobel Prize winners). And, later, he was Professor at Harvard, at the Institute for Advanced Study in Princeton (where he lived in the house that once belonged to Albert Einstein) and then Harvard again.

It is difficult to summarize in a short space of time the contributions of Professor Maskin. On the one hand, he has advised the thesis of an extraordinary group of economists (including the Nobel prize winner of 2014 Jean Tirole). On the other hand, he has expanded analytical tools that gave us the wonderful mind of John Nash to dynamic situations, incomplete information and discon- tinuities. But at this Laudatio, I want to focus on his greatest contribution to the theory of mechanism design which is what led him to the achievement of his Nobel prize.

The so-called "controversy of socialism" was fought between economists of various nationalities and political attitudes between 1880 and 1930. Initially, criticism against a socialist system was centered on the impossibility of calcu- lating the optimal rates of exchange among goods. But soon, it was discovered that a socialist system can duplicate the performance of a market system and do better on the control and distribution of initial resources (land, actions...). The critique of socialism then took a different course emphasizing the lack of incentives for managers to minimize costs and to produce socially optimum quantities. Meanwhile, Paul Samuelson (1954) had emphasized the diffi culty of creating a system of effi cient allocation of public goods that would be com- patible with the incentives of individuals to behave honestly.

Later, Leonid Hurwicz (1972) (who shared the Nobel with Myerson and Maskin) proved that this incompatibility was a trait common in any mechanism for the allocation of private or public goods. It seemed that we were faced with an insurmountable diffi culty for such endeavor, but it was not so.

In "Nash equilibrium and Welfare Optimality" Professor Maskin introduced the possibility that individuals monitor each other through messages on the characteristics of their neighbors. And he gave us elegant conditions (Maskin Monotonicity) for the attainment of social objectives when agents behave self- ishly, that is, in the worst-case scenario.
He also presented a general mechanism (Maskin Mechanism) that, under the previous assumptions, allows us to reconcile individual incentives and social objectives. This construction was extended to environments with several stages and incomplete information demonstrating its versatility and potential.

I have to say that a preliminary version of these results was presented at a seminar at the LSE that I attended and that, honestly, I recall I understood nothing... My only recollection of this event is the thundering voice of Frank Hahn at the end of the seminar, "Eric, the presentation have to be improved 100%".

Mechanism design theory is in its infancy, but even so it has produced im- portant applications: auctions such as the radio spectrum (which in Germany raised 50,000 million euros to the coffers of the State). The design of effi cient mechanisms for organ transplantation and the assignment of students to schools. The design of mechanisms against pollution. The distribution of food for the poor and, lately, its application to the design of criptocoins is being considered. I don't want to finish these words without a story that illustrates the char- acter of Professor Maskin. One of my students, Carlos González-Pimienta, was presenting his work at a Conference when a member of the audience made him a suggestion. Without looking to see who made it, Carlos rejected it in rather sharp terms, as he said later, to try to quell what he perceived as a criticism of his work. To his surprise, the other person continued arguing very calmly his proposal. Carlos, a bit surprised, looked at the faces of absolute disbelief of the people who were in the front row and approached his interlocutor and shaw he was wearing an identifier with the name of ERIC S. MASKIN. Carlos quickly replied with an "Oh yes, now I understand it". Later, when he checked his email, he found an email from Professor Maskin congratulating him for his work and suggesting ways of improving it. Subsequently, Professor Maskin came to Madrid to participate in the thesis of Carlos. The secretaries of my Depart- ment asked me who was that man who was so modest and polite and I told them "that man one day, will win the Nobel Prize". This, ladies and gentlemen, shows
that economists (occasionally) can make successful predictions.

Thanks you very much.