1. Alex Tabarrok and Tyler Cowen (also here) have the most useful posts.

2. I was very relieved that the prize did not go to a macroeconomist. I do not see how I could write a charitable post if there is another Nobel Prize given for macro. I especially did not want to have to write a post about Bill Buckner getting into Hall of Fame.

3. On Holmstrom, Alex writes,

Suppose that you are a principal monitoring an agent who produces output. The output depends on the agent’s effort but also on noise. It wouldn’t be a very efficient contract to just reward the agent based on output since then you would mostly be responding to noise–punishing hard-working agents when the noise factors were bad and rewarding lazy agents when the noise factors were good. Not only is that unfair–if you setup a contract like this the agents will a) demand that you pay them a lot of money in the good state because they will be taking on a lot of risk that they don’t control and b) the agents won’t put in much effort anyway since their effort will tend to be overwhelmed by the noise, either good or bad. Thus, rewarding output alone gets you the worst of all worlds, you have to pay a lot and you don’t get much effort.

As I read Cosmides and Tooby, hunter-gatherers understood this. You want to let gatherers keep their output, which is not luck-driven, but you want hunters to share output, which is very dependent on luck.

Sometimes, theorists use a lot of math to come up with results that people operating in the real world have arrived at through experience. Indeed, this is a good thing, in my view. Because often the alternative is to come up with results that have no real-world relevance at all.

4. Maybe Cosmides and Tooby should get some consideration for the Nobel.