Department of Humanities and Social Sciences
How the Sausage Is Made: Markets and Contracts
Dr. Parikshit Ghosh
December 2, 2016 (Friday) at 10.30 AM
Venue: Lecture Hall 3
Classical economic theory culminates in Adam Smith’s idea that a market economy functions as if an invisible hand is channelizing resources to their most efficient uses. This conclusion does not take into account strategic behaviour or incomplete information, nor does it flesh out how individuals and firms arrive at agreements about buying and selling goods and services. This year’s recipients of the Nobel Prize in economics, Oliver Hart and Bengt Holmstrom, have made pioneering contributions to contract theory, which studies precisely such issues. Their theoretical work helps us understand how firms motivate workers to work hard, buyers ensure they are buying goods of high quality, shareholders incentivize managers take decisions that serve their interest, banks make sure that loans are repaid, and insurance companies cope with risk. They also help us understand how organizations shape themselves (e.g., whether a computer chip manufacturer and a PC manufacturing firm will merge or do business as separate entities), and how all this affects Adam Smith’s notion of the invisible hand. This talk will review some key ideas found in the work of the laureates and the field of enquiry they helped create.
Brief Bio-sketch of the speaker
Dr. Parikshit Ghosh was educated at Presidency College, Calcutta, the Delhi School of Economics and Boston University. He has held faculty positions in Texas A&M University and University of British Columbia, and is currently associate professor at the Delhi School of Economics. His research interests lie in the areas of game theory, political economy and economic development. Dr. Ghosh has published his research in national and international peer reviewed journals, and has also contributed opinion pieces to outlets like Hindustan Times, Indian Express, Economic Times, The Wire, Quint, etc. He is currently acting editor of the website "Ideas for India", which aims to make accessible to the general public the results of academic research on the Indian economy.