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The Knowledge We Have Lost in InformationThe History of Information in Modern Economics$
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Philip Mirowski and Edward Nik-Khah

Print publication date: 2017

Print ISBN-13: 9780190270056

Published to Oxford Scholarship Online: June 2017

DOI: 10.1093/acprof:oso/9780190270056.001.0001

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Private Intellectuals and Public Perplexity

Private Intellectuals and Public Perplexity

The TARP

Chapter:
(p.221) 16 Private Intellectuals and Public Perplexity
Source:
The Knowledge We Have Lost in Information
Author(s):

Philip Mirowski

Edward Nik-Khah

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780190270056.003.0016

This chapter describes a more obscure chapter in the history of market design: the attempt on the part of certain market designers to supposedly “fix” the economic meltdown of 2008 by proposing to construct markets that would sell “toxic assets” at their true prices. This reveals the hubris of market designers, but also the disdain in which they were eventually held by the Treasury officials responsible for the TARP. The chapter reveals some of the drawbacks of the belief that market failures can be remedied by more markets retailed by economists.

Keywords:   TARP, toxic asset, Lawrence Ausubel, Peter Cramton, market designer, clock auction, winner’s curse, common value

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