Michael Spence

Last updated
Michael Spence
A Michael Spence.jpg
Spence in 2008
Born (1943-11-07) November 7, 1943 (age 75) [1]
Nationality United States
Institution Harvard University
Stanford University
SDA Bocconi School of Management
New York University
Field Microeconomics, labor economics
Alma mater Harvard University, (Ph.D.)
University of Oxford, (B.A.)
Princeton University, (B.A.)
Doctoral
advisor
Kenneth Arrow [2]
Thomas Schelling [2]
Influences Richard Zeckhauser
Contributions Signaling theory
Awards John Bates Clark Medal (1981)
Nobel Memorial Prize in Economics (2001)
Information at IDEAS / RePEc

Andrew Michael Spence (born November 7, 1943, [3] Montclair, New Jersey) is a Canadian American economist and recipient of the 2001 Nobel Memorial Prize in Economic Sciences, along with George Akerlof and Joseph E. Stiglitz, for their work on the dynamics of information flows and market development.

Montclair, New Jersey Township in New Jersey

Montclair is a township in Essex County, New Jersey, United States. As of the 2010 United States Census, the township's population was 37,669, reflecting a decline of 1,308 (−3.4%) from the 38,977 counted in the 2000 Census, which had in turn increased by 1,248 (+3.3%) from the 37,729 counted in the 1990 Census. As of 2010, it was the 60th-most-populous municipality in New Jersey.

New Jersey State of the United States of America

New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is located on a peninsula, bordered on the north and east by the state of New York, particularly along the extent of the length of New York City on its western edge; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware River and Pennsylvania; and on the southwest by the Delaware Bay and Delaware. New Jersey is the fourth-smallest state by area but the 11th-most populous, with 9 million residents as of 2017, and the most densely populated of the 50 U.S. states; its biggest city is Newark. New Jersey lies completely within the combined statistical areas of New York City and Philadelphia. New Jersey was the second-wealthiest U.S. state by median household income as of 2017.

Canadians citizens of Canada

Canadians are people identified with the country of Canada. This connection may be residential, legal, historical or cultural. For most Canadians, several of these connections exist and are collectively the source of their being Canadian.

Contents

Career

Spence is probably most famous for his job-market signaling model, which essentially triggered the enormous volume of literature in this branch of contract theory. In this model, employees signal their respective skills to employers by acquiring a certain degree of education, which is costly to them. Employers will pay higher wages to more educated employees, because they know that the proportion of employees with high abilities is higher among the educated ones, as it is less costly for them to acquire education than it is for employees with low abilities. For the model to work, it is not even necessary for education to have any intrinsic value if it can convey information about the sender (employee) to the recipient (employer) and if the signal is costly.

In economics, contract theory studies how economic actors can and do construct contractual arrangements, generally in the presence of asymmetric information. Because of its connections with both agency and incentives, contract theory is often categorized within a field known as Law and economics. One prominent application of it is the design of optimal schemes of managerial compensation. In the field of economics, the first formal treatment of this topic was given by Kenneth Arrow in the 1960s. In 2016, Oliver Hart and Bengt R. Holmström both received the Nobel Memorial Prize in Economic Sciences for their work on contract theory, covering many topics from CEO pay to privatizations.

Spence did his middle and high school education at the University of Toronto Schools of the University of Toronto. In 1966, he was awarded a Rhodes Scholarship at Oxford University upon graduation from Princeton University with a degree in philosophy. He studied mathematics at Oxford. [4] He obtained a PhD in Economics from Harvard. Spence is a Philip H. Knight Professor Emeritus and former Dean of the Stanford Graduate School of Business; [5] he is the Chairman of the Commission on Growth and Development.

University of Toronto Schools

University of Toronto Schools (UTS) is an independent secondary day school affiliated with the University of Toronto in Toronto, Ontario, Canada. The school follows a specialized academic curriculum, and admission is determined by competitive examination. UTS is associated with two Nobel Prize Laureates.

Rhodes Scholarship an international postgraduate award for students to study at the University of Oxford

The Rhodes Scholarship is an international postgraduate award for students to study at the University of Oxford. It was established in 1902, making it the first large-scale programme of international scholarship. The Rhodes Scholarship was founded by English businessman and politician Cecil John Rhodes, to promote unity between English speaking nations and instill a sense of civic-minded leadership and moral fortitude in future leaders irrespective of their chosen career paths. Although initially restricted to male applicants from countries which are today within the Commonwealth, as well as Germany and the United States, today the Scholarship is open to applicants from all backgrounds and from across the globe. Since its creation, controversy has surrounded both its former exclusion of women, and Rhodes' Anglo-supremacist beliefs and legacy of colonialism.

Princeton University University in Princeton, New Jersey

Princeton University is a private Ivy League research university in Princeton, New Jersey. Founded in 1746 in Elizabeth as the College of New Jersey, Princeton is the fourth-oldest institution of higher education in the United States and one of the nine colonial colleges chartered before the American Revolution. The institution moved to Newark in 1747, then to the current site nine years later, and renamed itself Princeton University in 1896.

Spence joined the faculty of New York University's Stern School of Business on September 1, 2010. [6] He joined the faculty of SDA Bocconi School of Management in Italy in July 2011. [7]

New York University private research university in New York, NY, United States

New York University (NYU) is a private research university originally founded in New York City but now with campuses and locations throughout the world. Founded in 1831, NYU's historical campus is in Greenwich Village, New York City. As a global university, students can graduate from its degree-granting campuses in NYU Abu Dhabi and NYU Shanghai, as well as study at its 12 academic centers in Accra, Berlin, Buenos Aires, Florence, London, Los Angeles, Madrid, Paris, Prague, Sydney, Tel Aviv, and Washington, D.C.

The New York University Leonard N. Stern School of Business is the business school of New York University. It is also a founding member of the Association to Advance Collegiate Schools of Business. Established as the School of Commerce, Accounts and Finance in 1900, the school changed its name in 1988 in honor of Leonard N. Stern, an alumnus and benefactor of the school. One of the most prestigious business schools in the world, it is also one of the oldest. The school is located on NYU's Greenwich Village campus next to the Courant Institute of Mathematical Sciences. Its alumni include some of the wealthiest in the world, as well as top business leaders and executives.

SDA Bocconi School of Management is the graduate business school of Bocconi University and is considered one of the most prestigious business schools in Europe. SDA Bocconi offers executive, custom and MBA programs, as well as specialised masters, and regularly takes on research projects on commission.

He is a senior fellow at Stanford University's Hoover Institution and the Philip H. Knight Professor Emeritus of Management in the Graduate School of Business. [8] Spence is also a Commissioner for the Global Commission on Internet Governance. [9] Additionally, Spence is also a member of the Berggruen Institute's 21st Century Council. [10] [11]

Stanford University private research university located in Stanford, California, United States

Leland Stanford Junior University is a private research university in Stanford, California. Stanford is known for its academic strength, wealth, proximity to Silicon Valley, and ranking as one of the world's top universities.

The Hoover Institution on War, Revolution, and Peace is an American public policy think tank and research institution located at Stanford University in California. It began as a library founded in 1919 by Republican and Stanford alumnus Herbert Hoover, before he became President of the United States. The library, known as the Hoover Institution Library and Archives, houses multiple archives related to Hoover, World War I, World War II, and other world history. According to the 2016 Global Go To Think Tank Index Report, Hoover is No. 18 in the "Top Think Tanks in the United States".

Berggruen Institute organization

The Berggruen Institute is an independent, non-partisan think tank which develops ideas to shape political and social institutions.

He is the author of three books and 50 articles, and has also been a consistent contributor to Project Syndicate , an international newspaper syndicate, since 2008. Among his beliefs are that high-frequency trading should be banned. [12]

Project Syndicate

Project Syndicate is an international media organization that publishes and syndicates commentary and analysis on a variety of important global topics. All opinion pieces are published on the Project Syndicate website, but are also distributed to a wide network of partner publications for print. As of 2016, it has a network of 459 media outlets in 155 countries.

In financial markets, high-frequency trading (HFT) is a type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages high-frequency financial data and electronic trading tools. While there is no single definition of HFT, among its key attributes are highly sophisticated algorithms, co-location, and very short-term investment horizons. HFT can be viewed as a primary form of algorithmic trading in finance. Specifically, it is the use of sophisticated technological tools and computer algorithms to rapidly trade securities. HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second.

Spence had both Bill Gates and Steve Ballmer in a graduate-level economics class at Harvard. In a 1999 Fortune interview, however, Gates and Ballmer admitted not attending class and passing only after cramming for four days before the final. [13]

Honors and awards

Spence is an Honorary Fellow of Magdalen College, Oxford, where he studied as a Rhodes Scholar. [14] He was the recipient of the Nobel Memorial Prize in Economic Sciences in 2001, as well as the John Bates Clark Medal from the American Economics Association in 1981. [15]

Selected works

Personal life

Spence currently lives in Milan, Italy with his wife and children.[ citation needed ]

See also

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In contract theory and economics, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This asymmetry creates an imbalance of power in transactions, which can sometimes cause the transactions to go awry, a kind of market failure in the worst case. Examples of this problem are adverse selection, moral hazard, and monopolies of knowledge.

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Bocconi University

Bocconi University is a private university in Milan, Italy. Bocconi provides undergraduate, graduate and post-graduate education in the fields of economics, management, finance, law, political science and public administration. SDA Bocconi, the university's business school, and offers MBA and Executive MBA programs.

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References

  1. "A. Michael Spence – Facts". NobelPrize.org.
  2. 1 2 Signaling in Retrospect and the Informational Structure of Markets Nobel Lecture Retrieved September 12, 2016.
  3. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2001". NobelPrize.org. Retrieved 2018-11-07.
  4. "A. Michael Spence - Biographical". www.nobelprize.org. Retrieved June 14, 2016.
  5. "Nobel Laureates - Harvard University". Harvard University. Retrieved June 11, 2016.
  6. "NYU Stern | News | A. Michael Spence, Nobel Economist, to Join NYU Stern". www.stern.nyu.edu. February 22, 2010. Retrieved June 14, 2016.
  7. "Nobel Economist Michael Spence Joins SDA Bocconi Faculty". BusinessBecause. July 25, 2011. Retrieved June 18, 2016.
  8. {{Cite web|url=https://www.stern.nyu.edu/faculty/bio/a-michael-spence%7Ctitle=A. Michael Spence - Biography|
  9. "OurInternet". www.ourinternet.org. Retrieved June 14, 2016.
  10. "Berggruen Institute".
  11. Forbes, Miguel. "Charles Taylor Wins $1M First Inaugural Berggruen Nobel Prize", Forbes , January 3, 2017.
  12. Philips, Matthew (March 28, 2011). "Should High-Frequency Trading Be Banned? One Nobel Winner Thinks So". Freakanomics blog.
  13. "The $100 Billion Friendship In a frank chat with FORTUNE's Brent Schlender, Bill Gates and Steve Ballmer talk about their partnership and how it will shape Microsoft in the 21st century". archive.fortune.com. October 25, 1999. Retrieved June 14, 2016.
  14. "People at Magdalen - Magdalen College Oxford (Search by last name)". www.magd.ox.ac.uk. Retrieved June 14, 2016.
  15. "A. Michael Spence - Biography". https://www.stern.nyu.edu . Retrieved April 7, 2019.External link in |website= (help)
Awards
Preceded by
James J. Heckman
Daniel L. McFadden
Laureate of the Nobel Memorial Prize in Economics
2001
Served alongside: George A. Akerlof, Joseph E. Stiglitz
Succeeded by
Daniel Kahneman
Vernon L. Smith