Jean Tirole: Mathematician-Economist-Humanist

Jean Tirole, the Nobel Prize winner in Economic Sciences in 2014, who in November 2018 visited the Financial university in Moscow, presents one of the most striking examples of the evolution currently experienced by some modern economists. He started his career as an economist at the time of rapid development of theories of regulation and competition policy. It was also the time of intensive development of industrial organisation (industrial economy), and especially its branch oriented to the public policy issues — economic regulation, antitrust law, and, more generally, economic governance of law in defning property rights, enforcing contracts, and providing organisational infrastructure. The progress in these areas reflected two methodological breakthroughs: the game theory and the theory of mechanism design. The widening use of game theory in industrial economics led to the migration of its achievements into other branches of microeconomics, such as behavioural economics and corporate fnance. In 1978, Jean Tirole left for the uSA to get a PhD in Economics at the Massachusetts Institute of Technology (MIT). He began his formation as an economist. The article tells about Jean Tirole’s way from an engineer and mathematician to the world-class economist. The author has paid special attention to the traditions of the French economic science, which had a considerable impact on the main areas of scientifc interests of Jean Tirole. Tirole’s managerial skills allowed to build an entire scientifc school around him both at the university of Toulouse and the Jean-Jaques Laffont Foundation, and in the newly formed Institute for Advanced Research.

1. Ekelund R. B., Jr., Hébert R. F. Secret origins of modern microeconomics: Dupuit and the engineers. Chicago: University of Chicago Press; 1999. 468 p.

2. Dupuit A. De la mesure de l’utilité des travaux publics. Annales des ponts et chaussées. 1844;8(2 sem):332–375.

3. Tirole J. Market failures and public policy. The American Economic Review. 2015;105(6):1665–1682. DOI: 10.1257/aer.15000024

4. Navier H. De l’exécution des travaux publics, et particulièrement des concessions. Journal de génie civil. 1830;8:327–352.

5. Cournot A. Recherches sur les principes mathématiques de la théorie des richesses. Paris: Chez L. Hachette; 1838. 198 p.

6. Funkhouser H. G. Historical development of the graphical representation of statistical data. Osiris. 1937;3:269–404.

7. Isnard A.-N. Traité Des Richesses, contenant l’analyse de l’usage des richesses en général & de leurs valeurs; les principes & les loix naturelles de la circulation des richesses, de leur distribution, du commerce, de la circulation des monnoies & de l’impôt, & des recherches historiques sur les révolutions que les droits de propriété publics & particuliers ont éprouvées en France depuis l’origine de la monarchie. Londres: chez François Grasset; 1781. 344 p.

8. Divisia F. L’indice monétaire et la théorie de la monnaie. Revue d’économie politique. 1925;39(4,5,6):842– 861, 980–1008, 1121–1151.

9. Divisia F. L’indice monétaire et la théorie de la monnaie. Revue d’économie politique. 1926;40(1):49–81.

10. Divisia F. L’économie rationnelle. Paris: Gaston Doin et Cie; 1928. 436 p.

11. Roy R. La distribution du revenu entre les divers biens. Econometrica. 1947;15(3):205–225. DOI: 10.2307/1905479

12. Boiteux M. La tarification des demandes en pointe: Application de la théorie de la vente au coût marginal. Revue générale de l’électricité. 1949;58:321–340.

13. Friedman M. Conversation with Milton Friedman. In: Snowdon B., Vane H., eds. Conversations with leading economists: Interpreting modern macroeconomics. Cheltenham: Edward Elgar; 1999:124–144.

14. Coase R. Interview with Ronald Coase. Newsletter of the International Society for New Institutional Economics. 1999;2(1):3–10.

15. Quotes from RWER. URL: https://sites.google.com/site/eeauasadzaman/quotes/quotes-from-rwer

16. Bénabou R., Tirole J. Mindful economics: The production, consumption, and value of beliefs. Journal of Economic Perspectives. 2016;30(3):141–164. DOI: 10.1257/jep.30.3.141

17. Bénabou R., Tirole J. Identity, morals and taboos: Beliefs as assets. The Quarterly Journal of Economics. 2011;126(2):805–855. DOI: 10.1093/qje/qjr002

18. Bénabou R., Tirole J. Individual and corporate social responsibility. Economica. 2010;77(305):1–19. DOI: 10.1111/j.1468–0335.2009.00843.x

19. Bénabou R., Tirole J. Over my dead body: Bargaining and the price of dignity. American Economic Review. 2009;99(2):459–465. DOI: 10.1257/aer.99.2.459

20. Bénabou R., Tirole J. Belief in a just world and redistributive politics. The Quarterly Journal of Economics. 2006;121(2):699–746. DOI: 10.1162/qjec.2006.121.2.699

21. Bénabou R., Tirole J. Incentives and prosocial behavior. American Economic Review. 2006;96(5):1652– 1678. DOI: 10.1257/aer.96.5.1652

22. Bénabou R., Tirole J. Willpower and personal rules. Journal of Political Economy. 2004;112(4):848–886. DOI: 10.1086/421167

23. Bénabou R., Tirole J. Intrinsic and extrinsic motivation. The Review of Economic Studies. 2003;70(3):489– 520. DOI: 10.1111/1467–937X.00253

24. Bénabou R., Tirole J. Self-confidence and personal motivation. The Quarterly Journal of Economics. 2002;117(3):871–915. DOI: 10.1162/003355302760193913

25. Shiller R. J. Narrative economics and neuroeconomics. Finansy: teoriya i praktika = Finance: Theory and Practice. 2018;22(1):64–91. DOI: 10.26794/2587–5671–2018–22–1–64–91

26. Bénabou R., Falk A., Tirole J. Narratives, imperatives, and moral reasoning. NBER Working Paper. 2018;(24798). URL: https://www.nber.org/papers/w24798.pdf

27. Hardin G. The tragedy of the commons. Science. 1968;162(3859):1243–1248. DOI: 10.1126/science.162.3859.1243

28. Hardin G. Extensions of “The tragedy of the commons”. Science. 1998;280(5364):682–683. DOI: 10.1126/science.280.5364.682

29. Ostrom E. Governing the commons: The evolution of institutions for collective action. Cambridge: Cambridge University Press; 1990. 298 p.

30. The Sveriges Riksbank Prize in economic sciences in memory of Alfred Nobel 2009. Nobel Media AB 2019. 2019. URL: https://www.nobelprize.org/prizes/economic-sciences/2009/summary/

31. van Laerhoven F., Ostrom E. Traditions and trends in the study of the commons. International Journal of the Commons. 2007;1(1):3–28. DOI: 10.18352/ijc.76

32. Gollier C., Tirole J. Negotiating effective institutions against climate change. Economics of Energy and Environmental Policy. 2015;4(2):5–27. DOI: 10.5547/2160–5890.4.2.cgol

33. Tirole J. Overcoming adverse selection: How public intervention can restore market functioning. American Economic Review. 2012;102(1):29–59. DOI: 10.1257/aer.102.1.29

34. Tirole J. Some political economy of global warming. Economics of Energy and Environmental Policy. 2012;1(1):121–132. DOI: 10.5547/2160–5890.1.1.10

35. Beccherle J., Tirole J. Regional initiatives and the cost of delaying binding climate change agreements. Journal of Public Economics. 2011;95(11–12):1339–1348. DOI: 10.1016/j.jpubeco.2011.04.007

36. Tirole J. The dynamics of open source contributors. American Economic Review. 2006;96(2):114–118. DOI: 10.1257/000282806777211874

37. Lerner J., Tirole J. The scope of open source licensing. The Journal of Law, Economics, and Organization. 2005;21(1):20–56. DOI: 10.1093/jleo/ewi002

38. Lerner J., Tirole J. The economics of technology sharing: Open source and beyond. Journal of Economic Perspectives. 2005;19(2):99–120. DOI: 10.1257/0895330054048678

39. Lerner J., Tirole J. Some simple economics of open source. The Journal of Industrial Economics. 2002;50(2):197–234. DOI: 10.1111/1467–6451.00174

40. Tirole J. On the possibility of speculation under rational expectations. Econometrica. 1982;50(5):1163– 1181. DOI: 10.2307/1911868

41. Tirole J. Asset bubbles and overlapping generations: A synthesis. Stanford IMSSS Discussion Paper. 1983;(440).

42. Tirole J. Asset bubbles and overlapping generations. Econometrica. 1985;53(6):1499–1528. DOI: 10.2307/1913232

43. Fudenberg D., Tirole J. Dynamic models of oligopoly. Chur: Harwood Academic Publ. GmbH; 1986. 83 p.

44. Tirole J. The theory of industrial organization. Cambridge, MA: The MIT Press; 1988. 496 p.

45. Tirole J. Concurrence imparfaite. Paris: Éditions Economica; 1985. 133 p.

46. Fudenberg D., Tirole J. Learning-by-doing and market performance. The Bell Journal of Economics. 1983;14(2):522–530. DOI: 10.2307/3003653

47. Fudenberg D., Tirole J. The fat-cat effect, the puppy-dog ploy, and the lean and hungry look. The American Economic Review. 1984;74(2):361–366.

48. Laffont J.-J, Tirole J. Using cost observation to regulate firms. Journal of Political Economy. 1986;94(3, Pt. 1):614–641. DOI: 10.1086/261392

49. Rey P., Tirole J. The logic of vertical restraints. The American Economic Review. 1986;76(5):921–939.

50. Tirole J. Hierarchies and bureaucracies: On the role of collusion in organizations. Journal of Law, Economics and Organization. 1986;2(2):181–214. DOI: 10.1093/oxfordjournals.jleo.a036907

51. Tirole J. Procurement and renegotiation. Journal of Political Economy. 1986;94(2):235–259. DOI: 10.1086/261372

52. Maskin E., Tirole J. A theory of dynamic oligopoly, III: Cournot competition. European Economic Review. 1987;31(4):947–968. DOI: 10.1016/0014–2921(87)90008–0

53. Laffont J.-J., Tirole J. The dynamics of incentive contracts. Econometrica. 1988;56(5):1153–1175. DOI: 10.2307/1911362

54. Maskin E., Tirole J. A theory of dynamic oligopoly I: Overview and quantity competition with large fixed costs. Econometrica. 1988;56(3):549–569. DOI: 10.2307/1911700

55. Maskin E., Tirole J. A theory of dynamic oligopoly II: Price competition, kinked demand curves, and Edgeworth cycles. Econometrica. 1988;56(3):571–599. DOI: 10.2307/1911701

56. Caillaud B., Guesnerie R., Rey P., Tirole J. Government intervention in production and incentives theory: A review of recent contributions. The Rand Journal of Economies. 1988;19(1):1–26. DOI: 10.2307/2555394

57. Laffont J.-J., Tirole J. A theory of incentives in procurement and regulation. Cambridge: MA: The MIT Press; 1993. 732 p.

58. Rochet J.-C., Tirole J. Must-take cards: Merchant discounts and avoided costs. Journal of the European Economic Association. 2011;9(3):462–495. DOI: 10.1111/j.1542–4774.2011.01020.x

59. Rochet J.-C., Tirole J. Tying in two-sided markets and the honor all cards rule. International Journal of Industrial Organization. 2008;26(6):1333–1347. DOI: 10.1016/j.ijindorg.2008.01.002

60. Rochet J.-C., Tirole J. Competition policy in two-sided markets. In: Buccirossi P., ed. Handbook of antitrust economics. Cambridge, MA: The MIT Press; 2008:543–582.

61. Rochet J.-C., Tirole J. Two sided markets: A progress report. The Rand Journal of Economics. 2006;37(3):645–667. DOI: 10.1111/j.1756–2171.2006.tb00036.x

62. Rochet J.-C., Tirole J. Externalities and regulation in card payment systems. Review of Network Economics. 2006;5(1):1–14. DOI: 10.2202/1446–9022.1085

63. Rochet J.-C., Tirole J. An economic analysis of the determination of interchange fees in payment card systems. Review of Network Economics. 2003;2(2):69–79. DOI: 10.2202/1446–9022.1019

64. Rochet J.-C., Tirole J. Platform competition in two-sided markets. The Journal of the European Economic Association. 2003;1(4):990–1029. DOI: 10.1162/154247603322493212

65. Rochet J.-C., Tirole J. Cooperation among competitors: The economics of payment card associations. The Rand Journal of Economics. 2002;33(4):549–570. DOI: 10.2307/3087474

66. Rochet J.-C., Tirole J. Controlling risk in payments systems. Journal of Money, Credit and Banking. 1996;28(4, Pt. 2):832–862. DOI: 10.2307/2077924

67. Rochet J.-C., Tirole J. Interbank lending and systemic risk. Journal of Money, Credit and Banking. 1996;28(4, Pt. 2):733–762. DOI: 10.2307/2077918

68. DewatripontM., Tirole J. La Réglementation prudentielle des banques. Lausanne: ÉditionsPayot; 1993. 177 p.

69. Laffont J.-J., Tirole J. Competition in telecommunications. Cambridge, MA: The MIT Press; 1999. 336 p.

70. Tirole J. Financial crises, liquidity and the international monetary system. Princeton, NJ: Princeton University Press; 2002. 168 p.

71. Tirole J. The theory of corporate finance. Princeton, NJ: Princeton University Press; 2005. 656 p.

72. Vines D., Wills S. The rebuilding macroeconomic theory project: An analytical assessment. Oxford Review of Economic Policy. 2018;34(1–2):1–42. DOI: 10.1093/oxrep/grx062

73. Blanchard O. On the future of macroeconomic models. Oxford Review of Economic Policy. 2018;34(1– 2):43–54. DOI: 10.1093/oxrep/grx045

74. Wren-Lewis S. Ending the microfoundations hegemony. Oxford Review of Economic Policy. 2018;34(1– 2):55–69. DOI: 10.1093/oxrep/grx054

75. Stiglitz J. E. Where modern macroeconomics went wrong. Oxford Review of Economic Policy. 2018;34(1– 2):70–106. DOI: 10.1093/oxrep/grx057

76. Wright R. On the future of macroeconomics: A New Monetarist perspective. Oxford Review of Economic Policy. 2018;34(1–2):107–131. DOI: 10.1093/oxrep/grx044

77. Reis R. Is something really wrong with macroeconomics? Oxford Review of Economic Policy. 2018;34(1– 2):132–155. DOI: 10.1093/oxrep/grx053

78. Krugman P. Good enough for government work? Macroeconomics since the crisis. Oxford Review of Economic Policy. 2018;34(1–2):156–168. DOI: 10.1093/oxrep/grx052

79. Carlin W., Soskice D. Stagnant productivity and low unemployment: stuck in a Keynesian equilibrium. Oxford Review of Economic Policy. 2018;34(1–2):169–194. DOI: 10.1093/oxrep/grx060

80. Ghironi F. Macro needs micro. Oxford Review of Economic Policy. 2018;34(1–2):195–218. DOI: 10.1093/oxrep/grx050

81. Haldane A. G., Turrell A. E. An interdisciplinary model for macroeconomics. Oxford Review of Economic Policy. 2018;34(1–2):219–251. DOI: 10.1093/oxrep/grx051

82. Vines D., Wills S. The financial system and the natural real interest rate: Towards a ‘new benchmark theory model’. Oxford Review of Economic Policy. 2018;34(1–2):252–268. DOI: 10.1093/oxrep/grx061

83. Lindé J. DSGE models: Still useful in policy analysis? Oxford Review of Economic Policy. 2018;34(1– 2):269–286. DOI: 10.1093/oxrep/grx058

84. Hendry D. F., Muellbauer J. N.J. The future of macroeconomics: Macro theory and models at the Bank of England. Oxford Review of Economic Policy. 2018;34(1–2):287–328. DOI: 10.1093/oxrep/grx055

85. McKibbin W.J., Stoeckel A. Modelling a complex world: Improving macro-models. Oxford Review of Economic Policy. 2018;34(1–2):329–347. DOI: 10.1093/oxrep/grx056

86. Dewatripont M., Rochet J.-C., Tirole J. Balancing the banks: Global lessons from the financial crisis. Princeton, NJ: Princeton University Press; 2010. 160 p.

87. Holmström B., Tirole J. Inside and outside liquidity. Cambridge, MA: The MIT Press; 2011. 262 p.

88. Farhi E., Tirole J. Deadly embrace: Sovereignand financial balance sheetsdoom loops. The Review of Economic Studies. 2018;85(3):1781–1823. DOI: 10.1093/restud/rdx059

89. Farhi E., Tirole J. Shadow banking and the four pillars of traditional financial intermediation. NBER Working Paper. 2017;(23930). URL: https://www.nber.org/papers/w23930.pdf

90. Tirole J. Country solidarity in sovereign crises. American Economic Review. 2015;105(8):2333–2363. DOI: 10.1257/aer.20121248

91. Farhi E., Tirole J. Liquid bundles. Journal of Economic Theory. 2015;158:634–655. DOI: 10.1016/j.jet.2014.09.002

92. Dewatripont M., Tirole J. Macroeconomic shocks and banking regulation. Journal of Money, Credit and Banking. 2012;44(s2):237–254. DOI: 10.1111/j.1538–4616.2012.00559.x

93. Farhi E., Tirole J. Bubbly liquidity. The Review of Economic Studies. 2012;79(2):678–706. DOI: 10.1093/restud/rdr039

94. Tirole J. Illiquidity and all its friends. Journal of Economic Literature. 2011;49(2):287–325. DOI: 10.1257/jel.49.2.287

95. Dewatripont M., Tirole J. Liquidity regulation, bail-ins and bailouts. 2018. URL: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/by/tirole/prudential_treatment_of_liquidity_080618.pdf