A 90-year-old American economics professor has become the oldest winner of a Nobel Prize.

Leonid Hurwicz shared the Nobel Prize in Economics with Eric Maskin and Roger Myerson, two other Americans, for having “laid the foundations” of mechanism design theory, a branch of game theory examining market failure and the principles underpinning auctions.

Bookmakers cashed in as the famously unpredictable Royal Swedish Academy of Sciences announced that the most respected prize in economics would be awarded to a relatively obscure trio whose work is highly abstract.

Mr Hurwicz was told that he had won when the Academy called him at his home in Minneapolis. He admitted that he had not expected to win the ten million SwKr (£766,150) prize after so many years. “I thought that my time perhaps had passed already,” he said.

He said that the significance of his work was hard for most people and even many nonmathematical economists, to grasp. “What is important about it is that it cuts across different approaches and unifies such different parts of economics and some very abstract theories on the one hand, and about the history of economic institutions and policies,” he said.

Mechanism design theory looks at the paradoxes that result when economic actors withold information about their preferences. When one person wishes to buy a unique item, and another is happy to sell it, they both may have an incentive to lie about the true price they would be happy to trade at. As a result, trades that ought to take place often do not do so. The Nobel winners have investigated how no auction, however designed, can truly create a perfect outcome for everyone concerned. While abstract, the theories have applications in the real world, as they suggest that markets may not be the best way to provide so-called public goods, such as roads and television programmes.

Mr Maskin, 56, a professor at Princeton, was relieved that Mr Hurwicz was among the winners. “Many of us had hoped for many years that he would win. He is 90 years old now, and we thought time was running out. It is a tremendous honour to have the opportunity to share the prize with him and with Roger Myerson.”

Mr Myerson, also 56, of the University of Chicago, said that his work looked at “how does information gets used in society to allocate resources”.

The economics award’s official name is the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, as it was set up in 1969 and was not specified in Nobel’s will.

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