The Changing Face of Economics: Conversations with Cutting Edge Economists

5. Matthew Rabin

chapter 5 Matthew Rabin Professor of Economics, University of California at Berkeley  The interview was conducted November 9, 2001, on the University of California campus at Berkeley. How did you get interested in economics? I became interested in economics back in tenth grade. Before then I was interested in science. I have a memory of reading Free to Choose by Milton Friedman and some of Galbraith’s books in high school and being more convinced and fascinated by Milton Friedman and his arguments. I found Galbraith’s ideas paternalistic compared with Friedman’s, although I have come to be more sympathetic with his views about automobiles and other cultural matters as I have gotten older. Where did you go for your undergraduate studies, and what was your reaction to your early classes in economics? I did my undergraduate work at the University of Wisconsin at Madison. In regard to my ‹rst economic courses, I didn’t have a strong reaction. I was mathematically advanced and found the introductory classes interesting but easy. I got a job doing some research at the Poverty Institute at Wisconsin. My uncle, Eugene  137 Smolensky, was there, and he provided advice as well as family to visit. I don’t speci‹cally remember a lot about the courses that I took. My undergraduate honors thesis was an application of game theory. Even though I didn’t have any background in it, I did a simple model of an oligopoly with lags in consumer response. I was trying to see how those lags would affect the simple dynamics of oligopoly pricing models. Unfortunately, I solved it incorrectly. So even as an undergraduate you were interested in expanding traditional economics? I didn’t have in mind rejecting or expanding traditional economics . But the material in my honors thesis didn’t come from my courses. The work I did at the Poverty Institute at Madison was applied. But it was during this time that I decided to be a theorist. I had a double major in math and economics. My Ph.D. was pure theory. Where did you go after graduating from the University of Wisconsin? I went to the London School of Economics and from there to MIT for graduate work. I applied to what I was told were the best graduate programs in economics. The list did not include Chicago or Berkeley because I was told they were not particularly good places for graduate students at that time. Other than that I just applied to the best places and was told MIT was the place to go. I had no speci‹c knowledge of MIT beyond knowing it was the best of graduate schools. So I just decided to go there based on that. I don’t remember thinking much about it. I went to LSE because I ‹nished a semester early at Wisconsin, and spent a half a year there. There I sat in on Ken Binmore’s game theory course and worked with Julian Le Grand. I have been back to LSE several times since then. Did you enjoy your experience at MIT? Yes, in general, it was a positive in›uence. MIT taught me how to think critically, and it also turned me into a decent economic game theorist. Oliver Hart was one of my early advisers. Bob Gibbons taught me game theory. Drew Fudenberg, who joined the department after I got there, became my main adviser. He de‹nitely had a positive intellectual in›uence on me. But I think it’s fair to say that I had my own interests, and I was doing my own thing with a the changing face of economics 138 lot of support. I was intellectually engaged at MIT, but no one steered me. What was your dissertation topic? My dissertation topic was in pure game theory. It was about cheap talk, a formal model of credible communication in abstract terms. It focused on what statements that I say, given my private information and incentives, you should believe are credible. It was the basis of my job market paper that appeared in the Journal of Economic Theory. Joe Farrell was the ‹rst person in economics that looked at cheap talk. I read some of his stuff and became a big fan of his work, but it was Bob Gibbons who introduced me to cheap talk. Drew was not a fan of the topic initially...