Jean Tirole


My introduction when he received an honorary doctorate from the European University Institute in 2015:

This is my second attempt to introduce my classmate, my co-author, and my friend Jean Tirole. I hope to make a better job of it this time.

It is said that a generalist knows nothing about everything and a specialist knows everything about nothing. Less often said but equally true is that prolific is the antithesis of the Nobel Prize: prolific is to the Nobel Prize as generalist is to specialist. John Nash is the epitome of the Nobel Prize winner in economics: he had a long and unproductive life except for a single deeply significant insight early in his career. What then do we make of Jean Tirole? Unfortunately he does not number the papers in his vita: my own rough count is that over a career of 34 years he has published about 175 papers in scientific journals - roughly five papers a year. Prolific indeed: Jean has written about speculation and bargaining, about patents and puppy dogs, about innovation and hierarchies, about procurement and collusion, about sunspots and contracts, about self-control and the environment...more I am afraid than I have time to say in ten minutes.

Jean received his non-honorary doctorate in 1981 from MIT. At that time the use of game theoretic tools to understand information and uncertainty was beginning to revolutionize economics and the concepts of mechanism design and incentive constraints were being developed. I hope that sounds very abstract to you because economics is a very practical and applied science and the importance of those abstract tools is in the light they shed on important and practical problems - why is the banking system in such awful shape here in the EU - to take a contemporary example. And it is here that we have proof that breadth is not the enemy of depth: because Jean's work using the abstract tools of game theory and mechanism design to study the important and practical problem of government regulation in modern mixed economies is deep indeed.

In 1993 Jean's book with his lifelong collaborator Jean Jacques Laffont A Theory of Incentives in Procurement and Regulation was a revolutionary use of economic theory applied to a very practical and important problem. The book begins by reexamining the classical problem of rate-of-return regulation - government granted monopolies are generally limited in the prices they are allowed to charge. This can and does lead to malincentives leading to underinvestment and low quality - how do you feel about the queues at the post office? - and to understand how the problem can be mitigated it is necessary to understand both the uncertainty surrounding investment and the temporal component of investment. Laffont and Tirole tackle these problems head on, and the book is the bible for those who work in the area of regulation - our Jean-Michel Glachant can speak to that. The book goes on to address the key issues of competitions policy and privatization. The latter is particularly topical - for example in Greece where privatization of the transport system is a bone of contention between the Greek governmenet and its creditors. From Laffont and Tirole we know that the key trade-offs are three: the ability of the government to get the firms to respond to changed circumstances; the limited incentives of managers under direct government control; and the tendency of government agencies to be captured by special interests. There is a lot more there including the tools for a proper cost-benefit analysis - but you will have to read the book for that.

This is an unusual introduction for me - usually I get five minutes and the speaker gets an hour and a half. Today I get ten minutes and the speaker only five. So let me briefly speak on Jean's behalf. Jean cares deeply about making the world a better place for people. Jean is French foremost; European - and a citizen of the world as well. If you read his papers you will find many equations and dry prose and the depth of his care may not be apparent. But Jean trained as an engineer - and has become an engineer of economics - an engineer of society. Just as the dry equations of the airplane engineer let us travel faster with greater safety and more comfort, so each of Jean's equations help to make the world a better place for all of us to live in.

Now you might think that revolutionizing the theory of regulation and publishing 175 papers and 9 books on a diverse range of economics topics would be enough for one career. If so you would not understand how bleak economics was in Europe thirty years ago. There were a few bright spots - in the UK and here at the EUI - but intellectually the center of the world was the United States and within the United States - MIT. So you can imagine how shocked we all were when in the early 90s Jean left his position as full professor at MIT to take up a position at Toulouse. But that was the beginning of the second revolution in which Jean was a vital figure - the growth and success of the Toulouse program in economics. Do not underestimate the fact that this was not only an intellectual enterprise but great programs must be financed and we must appreciate the time and effort in raising the funds needed to build a great program. The building of the Toulouse program has been a crucial step in the broader revitalization of economics in Europe. Here at the EUI - one of the select places in Europe that competes with Toulouse in economics - we welcome the revitalization, we relish the competition - and above all we are grateful to Jean for his role in that revitalization.

Economics is a collaborative science and in introducing a man of such immense accomplishments as Jean it is only proper that I should make some mention of his collaborators. There are many - in a small way I am one of them - but I would single out two: Drew Fudenberg and the late Jean Jacque Laffont. In the early years Drew and Jean were leaders in the application of game theory to problems in industrial organization - work that I believe was the intellectual forerunner Jean's subsequent work on regulation. Jean Jacque Laffont was Jean's collaborator on the key work on regulation - and was the leader in the building of Toulouse. In honoring Jean we honor also these two.

If I may also add a personal note: in a world of aggressive and argumentative economists Jean speaks softly and has a quiet reserve. He is a very private man - although not without a sly sense of humor - yet he is an intellectual in the best tradition of intellectuals in all disciplines and throughout the world. He thinks deeply - and if his voice is soft, his pen is mighty.

Apparently for Jean breadth is not the enemy of depth. How does he do it? His friends have a theory: we believe that there is a small time-warp that contains an extra four hours a day. Each day Jean steps into that time-warp, sits down at his desk and does his thinking and writing. While the rest of us are limited to 24 hours a day - Jean has 28 at his disposal. Although the rest of us have searched far and wide for the entrance to this time-warp so far success has eluded us.

Here at the EUI we recognize the importance of the study of government regulation - indeed we have the Florence School of Regulation devoted to that purpose. So it is especially appropriate that

I present Jean Tirole for admission to the Honorary Degree of Doctor of the European University Institute