From policy, the theory expands its application base to the polity as well, and intrudes very elegantly into the realm of political economy. “More generally, the theory can be used to analyse the economic efficiency of alternative institutions for the provision of public goods, ranging from markets and consensual collective decision-making through majoritarian decision rules all the way to dictatorship.” Maybe there are lessons for the UPA administration on how best to negotiate the Congress-Left face-off on 123.

Hurwicz’ two papers — ‘Optimality and informational efficiency in resource allocation processes’ (1960), and ‘On informationally decentralised systems’ (1972) — provided the base for the theory, when he defined a mechanism as a “communication system”, that contains within it private information (or lack of it) and within which each economic agent tries to maximise utility. Later, in 1977, Maskin expanded the theory with Nash equilibrium and welfare optimality; and Myerson in 1981 with optimal auction design.

Among all of them, I found Maskin’s (co-authored by Jean Triole) March 2004 paper ‘The Politician and the Judge: Accountability in Government’ interesting as it explores a model (economists just can’t do without it) that attempts to capture the virtues and drawbacks of making public officials accountable, by which they mean “subjecting them to re-election”. It further explores “when decision-making powers should be allocated to the public directly (direct democracy), to accountable officials (called “politicians”), or to nonaccountable officials (called “judges”).

Minus the math, their conclusions (“Nonaccountability is most desirable when (a) the electorate is poorly informed about the optimal action, (b) acquiring decision-relevant information is costly, (c) feedback about the quality of decisions is slow. Therefore, technical decisions, in particular, may be best allocated to judges or appointed bureaucrats”, for instance) should provide adequate intellectual spinach for anyone interested in governance issues — or even in governing.