Three U.S. economists, one of them a 90-year-old professor emeritus, will share this year's Nobel prize in economics for their work on how people's knowledge and self-interest affect their behavior in the market or in social situations such as voting and labor negotiations.

Eric S. Maskin speaks in his office after winning the Nobel prize in economics Oct. 15. AP PHOTO

Leonid Hurwicz, who lives in south Minneapolis, is the oldest winner ever of the Nobel, the Royal Swedish Academy of Sciences said Oct. 15.

His work — along with that of Eric S. Maskin and Roger B. Myerson, who are 56 — led to a theory that plays a wide-ranging role in contemporary economics and political science, touching on areas as diverse as labor contract negotiations, auctions of government bonds, voting procedures and the structuring of insurance policies.

The academy said that their work on "mechanism design theory" has made it possible to "distinguish situations in which markets work well from those in which they do not." This helped economists identify efficient trading mechanisms, regulatory schemes and voting procedures.

Hurwicz, who is an emeritus economics professor at the University of Minnesota in Minneapolis, started work on this area in 1960.

Essentially, the three men studied how "game theory" can help determine the best, most efficient method for decision-making.

Game theory was advanced by John Nash, the subject of the film A Beautiful Mind, who received the prize in 1994.

The trio's work showed how to reach a desired outcome, such as improvements in social welfare or fatter profits, and what sort of government regulation should be put in place.