New Delhi: Often in a market, buyers don't know the true value of a product, and sellers may not know how much a customer can really pay. So how does one trade in such a scenario? Dr Arunava Sen, economist and winner of Infosys Award 2012, may have some answers. He has spent years analysing how buyers and sellers behave in auctions and other businesses where key information is often kept hidden.
"Those who have bargained will realise that people who bargain are not always truthful. So it IS possible to design a form of interaction in order that people, the rational players, have incentives to reveal their information truthfully and the outcome is the one that's efficient for instance, so that the transaction always takes place when the buyer's valuation is greater than seller's valuation," says Dr Sen.
Currently teaching at the Indian Statistical Institute, Dr Sen is globally recognised for his work on social choice, auction design and mechanism design, economic models that help structuring auctions of resources whose true worth is hard to measure, such as telecom spectrum. Dr Sen even has suggestions on how to improve the T20 IPL auctions.
"The way the IPL auctions were done... if memory serves me right that happened several years ago when it was decided the procedures for selling the franchise be done one at a time. So there is an extensive theory about how you might do them simultaneously which will have better revenue and allocative properties," he says.
Few know that Dr Sen was contacted by the film actor Shah Rukh Khan to help him approach the IPL auctions. While Dr Sen likes to play it down, what we do know is that Shah Rukh sent him his self-signed photograph as an appreciation of the inputs that he gave.
A graduate from Oxford and Princeton, Sen's papers have been published in leading ecomomic journals. His work on game theory, an area of mathematical economics, has also earned him a place in the prestigious Econometric Society.
"Game theory is in my opinion very fascinating, not just to me. If I were to explain the problem even to people who were not specialists they would be drawn to it, because it has tremendous possibilities and it lies at the intersection of many different disciplines. It has a precise formulation so its a mathematics of certain kind, on the other hand its motivated by the real life issues and it is of interest to many kinds of people to political scientists to specialists to international relations," he says.
When Dr Sen takes a break from game theory, he plays chess. But usually against the computer, because he hates losing to someone else. "I open chess sites before i open my mail every morning and I am a great fan of Viswanathan Anand. I have followed his career for a very long time. I follow his games and I followed his championship matches followed his tournaments and often I have done that in real time using chess sites, and he is a great hero of mine. I admire him for his accomplishments."
Dr Arunava Sen's contributions have not only revolutionised the field of mechanism design but are also a source of inspiration for young economists of India.