Trio shares Nobel prize for economics

FT.com / Global Economy - Trio shares Nobel prize for economics

"As the world struggles to recover from the financial crisis, the Nobel prize for economics has been awarded to three researchers whose work explains how market frictions can hinder the smooth functioning of the economy and its ability to adjust to shocks.

The laureates – Peter Diamond, Dale Mortenson and Christopher Pissarides – have made fundamental contributions to understanding how supply and demand are matched when there are transactions or search costs involved.

Their “search and matching” theories show that it is not enough to have buyers and sellers who can in principle agree on a price; those buyers and sellers must also find each other and decide to enter into a transaction rather than hold out for a better match. "