On 9th March the Economic Committee of the Hungarian Academy of Sciences organized a mini-conference on the Nobel-laureates of 2016 in economics. The event proved to be successful, the invited professionals could give lectures for a mixed but interested audience.
Dr. Edina Berlinger (Corvinus University of Budapest) talked about liquidity and contract theory and some applications of the theory. She started out with the short definitions of the different types of liquidity, then she tried to clarify why people need contarcts at all. Dr. Berlinger highlighted the fact that for Holmström and Hart it is not the commonly suggested set of causes that seem to have triggered the crisis. Some interesting conclusions emerged. First, financial markets collapsed due to adverse selection. And second, if the market agents cannot get the credits they need, it may be necessary to save them rather than the financial institutions in bankruptcy. In such a case all the markets may be paralysed, so careful actions are needed.
Daniel Horn’s (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Eötvös Loránd University) topic was incentive systems in public education. He started out with the standard agency models, then he gave a short summary on the issue of multi-tasking, some intertemporal problems (e.g. ratchet effect), followed by intrinsic motivation and some adverse effects. The whole lecture was devoted to the clarification of how to apply the theoretical background to the case of education.
Balázs Muraközy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences) talked about the relationship between contracts and globalisation. Globalisation raises a lot of questions as for contracts, because there are serious information deficiencies or asymetries . He mentioned the problem of modelling incomplete contracts in foreign trade, then concluded by some empirical results.
Kriszta Kovács (Eötvös Loránd University) summarized some views on contracts in general. She called attention to the fact that all contracts are general, so they always need to be interpreted. This is the reason why courts play so essential a role in modern societies.
All in all, the event was a real eye-opener for the audience. We could have some basic ideas on the importance of the research activity lying far away from the realm of neoclassical orthodoxy.