clipped from: www.economist.com   

Intelligent design

Oct 18th 2007
From The Economist print edition

A theory of an intelligently guided invisible hand wins the Nobel prize

“WHAT on earth is mechanism design?” was the typical reaction to this year's Nobel prize in economics, announced on October 15th. In this era of “Freakonomics”, in which everyone is discovering their inner economist, economics has become unexpectedly sexy. So what possessed the Nobel committee to honour a subject that sounds so thoroughly dismal? Why didn't they follow the lead of the peace-prize judges, who know not to let technicalities about being true to the meaning of the award get in the way of good headlines?

Mechanism-design theory aims to give the invisible hand a helping hand, in particular by focusing on how to minimise the economic cost of “asymmetric information”