Tirole, a Nobel Prize–winning French economist, explains in straightforward language what academic economists do, how they think about society and human behavior, and what advice they tend to offer governments about some of the biggest challenges they face: for example, how to regulate natural monopolies and financial institutions, how to deal with climate change, how to address unwanted inequalities of income and wealth, and how to handle unwanted unemployment. Like most economists, Tirole focuses on the allocation of scarce resources—an issue that even affluent societies face—and on the fact that, for better or for worse, people tend to act according to incentives. The trick, he argues, is for policymakers to craft incentives that encourage socially desirable behavior, such as reducing greenhouse gas emissions.
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