Leonid Hurwicz was a Polish-American economist and mathematician, known for his work in game theory and mechanism design. He started working on mechanism design theory in the 1960s. The theory allows us to distinguish situations in which markets work well from those in which they do not. It has helped economists identify efficient trading mechanisms, regulation schemes and voting procedures. He shared the 2007 Nobel Memorial Prize in Economic Sciences (with Eric Maskin and Roger Myerson) for having laid the foundations of mechanism design theory. Hurwicz was one of the oldest Nobel Laureates, having received the prize at the age of 90.
Hurwicz was born in Moscow, Russia, to a family of Polish Jews a few months before the October Revolution. Soon after Leonid’s birth, the family returned to Warsaw. Hurwicz and his family experienced persecution by both the Bolsheviks and Nazis, as he again became a refugee when Germany invaded Poland in 1939. His parents and brother fled Warsaw, only to be arrested and sent to Soviet labor camps. Hurwicz, who had graduated from Warsaw University in 1938, at the time of Nazi invasion on Poland was in London, moved to Switzerland then to Portugal and finally in 1940 he emigrated to the United States.
During a telephone interview, a representative of the Nobel Foundation told Hurwicz and his wife that Hurwicz was the oldest person to win the Nobel Prize. Hurwicz said, “I hope that others who deserve it also got it.” When asked which of all the applications of mechanism design he was most pleased to see he said welfare economics.
The winners applied game theory, a field advanced by mathematician John Forbes Nash, to discover the best and most efficient means to reach a desired outcome, taking into account individuals’ knowledge and self-interest, which may be hidden or private. Mechanism design has been used to model negotiations and taxation, voting and elections, to design auctions such as those for communications bandwidth, elections and labor talks and for pricing stock options.
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