Matthew O. Jackson, the William D. Eberle Professor of the Department of Economics in the School of Humanities and Sciences, has received a 2021 Frontiers of Knowledge Award in the Economics, Finance, and Management category “for illuminating the key role of networks in the transactions of economic and social life.”
Jackson, a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR) and also the Trione Chair of Stanford's Department of Economics, is known for co-founding the study of networks in economics and his extensive body of research in this area.
The award citation by the BBVA Foundation highlights Jackson’s contributions to networks, stating he “recognized the importance of networks for economics over 25 years ago,” in a theoretical paper that showed “how to predict which networks will form depending on the costs and benefits of forming links, and how these networks differ from the optimal ones.” The citation states Jackson “has inspired an enormous literature, both theoretical and empirical, in which networks play an essential role in helping us understand financial markets, economic development, and a host of other economic phenomena.”
Jackson and Asher Wolinsky developed a pathbreaking model of social and economic networks in their 1996 paper published in the Journal of Economic Theory. The work lay a foundation for Jackson’s further investigations into patterns of human behavior and interactions, including important studies of the labor market and inequalities; patterns of segregation and how networks mediate access to opportunities and information; social learning and the diffusion of information; and the spread of financial distress between firms. Jackson is also known for his work in the disciplines of game theory and microeconomic theory.
“Most of our interactions as human beings are social,” Jackson explained in an interview with the BBVA shortly after hearing of the award. “We depend on other people for information, connections, opportunities, and also for norms of behavior. So the networks we are embedded in become very important determinants of our behavior and outcomes. In that first paper, we tried to build the most basic model we could imagine about how people form relationships, whether they be business contacts, friendships, alliances or of any other sort.”
Today, the role of networks helps provide insights on a wide range of policies, extending from economic development and COVID-19 responses to trade sanctions, Jackson said.
Upon learning he had been honored with the prize, Jackson said, “the honor is one that I especially appreciate as one of the first awardees was my undergraduate advisor, Hugo Sonnenschein, who was also my mentor, coauthor, and close friend. It is wonderful to be joining the list of colleagues who have received the award in the past, and to see the recognition for the research community in social and economic networks.”
The BBVA Foundation Frontiers of Knowledge Awards, established in 2008, recognize fundamental contributions in eight domains — Basic Sciences (physics, chemistry, and mathematics); Biology and Biomedicine; Information and Communication Technologies; Ecology and Conservation Biology; Climate Change; Economics, Finance, and Management; Humanities and Social Sciences; and Music and Opera. The award recipients receive 400,000 euros (about $437,670 USD), a diploma, and a commemorative artwork representing the eight categories.
Since the award’s inception, a total of 11 Stanford faculty have received the honor in various categories. Stanford faculty who received the award in the Economics, Finance, and Management category include SIEPR Senior Fellow Paul R. Milgrom, the Shirley R. and Leonard W. Ely Jr. Professor of Humanities and Sciences, who received the 2012 award; Robert B. Wilson, the Adams Distinguished Professor of Management in the Graduate School of Business, Emeritus, who received the 2015 award; and SIEPR Senior Fellow, Emeritus, Timothy Bresnahan, the Landau Professor in Technology and the Economy in H&S, Emeritus, who received the 2017 award.
A version of this story was originally published by the School of Humanities and Sciences.