Blog Post 1

Maurice Allais was born in 1911 in Paris, France and later became a famous French economist and physicist who primarily studied macroeconomic theory and policies and helped pioneer the field. He was the first ever French citizen to receive the Nobel Prize in Economic Sciences, which he received in 1988 for his contributions to the theory of markets and efficient resource allocation. However, he did not get as much credits as other economists because he was committed to publishing his findings only in French rather than also publishing translations in English. As a result, there is a belief that Allais’ impact on economic theory would have been much more significant had his writings been in English. Nonetheless, Allais’ earliest writings have contributed significantly to what is now considered the generally accepted economic theory.

Apart from this, he is also known for his discoveries in utility theory, specifically decision-making under risk, in which he discovered a paradox about how people behave when choosing between various risks. This paradox is now known as the Allais paradox. Using this paradox, Allais was able to show that John von Neumann and Oscar Morgenstern’s widely accepted theory of maximization of expected utility was contradicted based on observations Allais’ had made about how humans behave when taking important decisions with risk involved.

Many of Allais’ observations and discoveries have been applied to the real world, for example Allais’ knowledge in the field was applied to helping set efficient prices for France’s many state-owned monopolies. Allais and his work have also been cited as a key source of inspiration by several young French economists and this will most likely have an immense impact on the field of economics in the coming decades. Allais has also had a huge influence on market theory by trying to generalize it since there are many dynamic aspects of the market in reality.

Allais’ work has been extremely significant in developing the field theoretically and understanding the way the world and humans’ function practically. Additionally, his work has also contributed via the many ways that his theories have been used in the real world. Apart from his considerable contributions to economic theory, Allais’ has also done research and published studies in relation to history and physics, specifically geophysics. For example, Allais carried out research about the behaviour of pendulums (their angular velocity) during a solar eclipse which yielded an unexpected anomalous effect. This effect is now known as the Allais effect. While proceeding experiments and research was carried out by several other scientists regarding this effect and have yielded mixed results, this shows that Allais’ impact outside the field of economic theory is still substantial.

Before taking this class, I did not know much about Maurice Allais’ contribution to field of economics, although I had come across his work in the past, specifically experiments he had performed in the geophysics field.

While most of Allais’ work does not have a direct link to the economics that will be discussed in this course, parts of his work have an indirect link and would be interesting to consider in discussion in relevance to any organization and its efficiency. Parts of Allais’ work can be applied to this course specifically and is relevant to the economics discussed in this course. Firstly, a large chunk of Allais’ finding concerns understanding human behaviour, and while it does not directly relate to the economics discussed in this course, parts of his study may be useful in understanding how employees would react in certain situations and expected behaviours when it comes to taking decisions involving risk, which is common in any organization. Secondly, Allais’ research and insights on setting efficient prices for state-owned monopolies could be interesting case studies to look at since it is at work in real life in many of France’s such organizations. Therefore, the effectiveness of such price setting measures and techniques can also be evaluated.