American economists in the buzz for Nobel

Research into market behavior and the psychology of decision-making could be awarded the Nobel prize for economics on Monday and improve the weak U.S. representation among this year's Nobel laureates.

Betting agency Ladbrokes says American behavioral economists Richard Thaler at the University of Chicago and Robert Shiller of Yale University are the top bets for this year's award.

The 10 million Swedish kronor ($1.5 million) prize is not among the original awards established by Swedish industrialist Alfred Nobel in his 1895 will, but was created in 1968 by the Swedish central bank in his memory.

Thaler is considered a pioneer in behavioral finance, having studied the psychology of decision-making and the behavior of markets, and Shiller is an influential economist who long predicted the U.S. housing bubble.

The economics prize - the last of this year's Nobel announcements - offers the U.S. a chance to boost its meager tally among the 2010 winners. So far there is only one American laureate: Richard Heck who shared the Nobel Prize in chemistry with two Japanese researchers.

Since the economy prize was first awarded in 1969, more than 40 Americans have received it. Last year, Americans Elinor Ostrom and Oliver Williamson won the prize for their work in economic governance, marking the first time ever a woman received the economics award.

"Usually the prize doesn't go to work that is popular right now, or that lies close in time. It absolutely doesn't have to have anything to do with the financial crisis for example," said Hubert Fromlet, a professor in International Economics at the Jonkoping International Business School and Linnaeus University in Sweden.

"Research results have to lie some 20 years or so back in time because that's about the amount of time needed to see whether it's sustainable," he said.

Fromlet's own top picks include American economist Dale Mortensen of Northwestern University, whose research focuses on labor economics.

Other names in this year's speculation include American finance researcher Eugene Fama, French microeconomist Jean Tirole, and American macroeconomists Robert Barro and Paul Romer.

The science unit of Thomson Reuters listed political economics professor Alberto Alesina, economic professors Kevin Murphy, Nohubiro Kiyotaki at Princeton and John Moore as front-runners for this year's award.

Last week, British professor Robert Edwards was awarded the Nobel Prize in medicine for his fertility research that led to the first test tube baby. Russian-born scientists Andre Geim and Konstantin Novoselov won the physics prize for groundbreaking experiments with graphene, the strongest and thinnest material known to mankind.

The chemistry award went to Heck and Japanese researchers Ei-ichi Negishi and Akira Suzuki for designing techniques to bind together carbon atoms.

Peruvian novelist Mario Vargas Llosa won the literature prize and the imprisoned Chinese democracy campaigner Liu Xiaobo was named the winner of the Nobel Peace Prize.

The awards are always handed out on Dec. 10, the anniversary of Nobel's death in 1896.

First woman wins Nobel Economics Prize

STOCKHOLM (AFP) – Elinor Ostrom became the first woman to win the Nobel Economics Prize on Monday for research seen as highly topical amid efforts to tackle climate change and in the wake of the economic crisis.

Economist Oliver Williamson, another US national, shared the 10-million-kronor (1.42-million dollar, 980,000-euro) prize with Ostrom, whose name has circulated for years as a possible winner.

Ostrom said it was "a great thrill and a very big surprise" to win the Nobel.

"I think we've already entered a new era and we recognise that women have the capability of doing great scientific work. I think it's an honour to be the first woman but I won't be the last," she told reporters. Ostrom's reaction to her win

Ostrom describes herself as a political scientist instead of an economist and is a professor at Indiana University, where she researches the management of common property or property under common control, such as natural resources. List of previous winners.

Her work -- inspired by her mother's "Victory Garden" during World War II to feed Allied troops -- challenged the notion that common property is poorly managed and should be either regulated by central authorities or privatised, the jury said.

"If we want to halt the degradation of our natural environment and prevent a repetition of the many collapses of natural-resource stocks experienced in the past, we should learn from the successes and failures of common-property regimes," it said.

She conducted numerous studies of user-managed fish stocks, pastures, woods, lakes and groundwater basins, and concluded that the outcomes are "more often than not, better than predicted by standard theories," it added.

Ostrom told a news conference at the university: "I have been studying how local people as well as government officials have attempted to solve very difficult problems," such as deforestation and loss of fisheries.

"When individuals have this way of working together officially and can build trust and respect they may be able to solve problems."

Williamson, a professor at the University of California Berkeley, was honoured with the other half of the prize "for his analysis of economic governance, especially the boundaries of the firm."

He has studied the existence of large firms and argued that hierarchical organisations represent alternative governance structures which differ in their approaches to resolving conflicts of interest. Americans dominate Nobel prizes

"According to Williamson's theory, large private corporations exist primarily because they are efficient.... When corporations fail to deliver efficiency gains, their existence will be called in question," the jury said.

Landis Gabel, a senior economics and management professor at top French business school INSEAD who studied under Williamson in the 1970s, told AFP the choice of Williamson and Ostrom was "timely."

"Both the Nobel laureates this year have been working on areas that kicked off with the concept of failing markets," he said.

"In the one case (in Ostrom's work) the failure has to do with common resources and the other (Williamson's) with imperfections that have implications for the structure of business firms," he said.

Timothy Van Zandt, also an economics professor at INSEAD, told AFP that Williamson's ideas "have changed the way financial firms are run."

Gabel told AFP that Williamson's ideas differed from more traditional market theorists, some of whose ideas are considered to have been discredited by the recent financial and economic turmoil.

"To the extent that there might be a reaction of the Nobel committee to the recent problems in the world economy, that reaction would be favourable to Williamson," he said. "Because his work doesn't start with an assumption that everything's perfect (in markets), but quite the contrary."

Meanwhile the committee's decision to honour Ostrom "fits in very well with current issues that the world faces about how to deal with over-exploited fisheries, global warming and other environmental problems which ultimately come down to too many people using too much of the resources," Van Zandt said.