Roger Myerson, a U of C Economics professor, won the Nobel prize in Economics today for, "for having laid the foundations of mechanism design theory."Steven Levitt's thoughts are here. Here is how he sums up Myerson's work:
The prize was “for having laid the foundations of mechanism design theory.” Mechanism design formalizes ways of thinking about how a social planner, manager, or parent can set up rules so that all parties involved have the incentives to act in the way that the planner/manager/parent prefers. This Nobel is not for the idea that you can design incentives this way, but rather for coming up with ingenious proofs that simplify the task of proving that, indeed, all parties have the right incentives — a task that can turn out to be awfully difficult.