Nobel and other Prizes

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Nobel and other Prizes

Explained: Auction theory

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Auction Theory, Nobel Prizes

Mains level : Auction theory and its utility

This year, the Nobel Prize for Economics was awarded to Paul R Milgrom and Robert B Wilson for “improvements to auction theory and inventions of new auction formats”.

Do you remember the 2G spectrum scam, Coalgate scam etc. that rocked the nation? Can you relate this auction theory for bidding public assets to private entities?

What is Auction?

  • Essentially, it is about how auctions lead to the discovery of the price of a commodity.
  • Auction theory studies how auctions are designed, what rules govern them, how bidders behave and what outcomes are achieved.
  • When one thinks of auctions, one typically imagines the auction of a bankrupt person’s property to pay off his creditors.
  • Indeed, this is the oldest form of auction. This simple design of such an auction — the highest open bidder getting the property (or the commodity in question) — is intuitively appealing as well.

Evolving definitions of auction

  • Over time, and especially over the last three decades, more and more goods and services have been brought under auction.
  • The nature of these commodities differs sharply. For instance, a bankrupt person’s property is starkly different from the spectrum for radio or telecom use.
  • Similarly, carbon dioxide emission credits are quite different from the spot market for buying electricity, which, in turn, is quite different from choosing which company should get the right to collect the local garbage.
  • In other words, no one auction design fits all types of commodities or seller.

The Auction Theory

Three key variables need to be understood before we move to actual propositions.

(1) Rules of the auction

  • Imagine participating in an auction. Your bidding behaviour is likely to differ if the rules stipulate open bids as against closed/sealed bids.
  • The same applies to single bids versus multiple bids, or whether bids are made one after another or everyone bids at the same time.

(2) Commodity or service

  • The second variable is the commodity or service being put up for auction. In essence, the question is how each bidder values an item.
  • This is not always easy to ascertain. In terms of telecom spectrum, it might be easier to peg the right value for each bidder because most bidders are likely to put the spectrum to the same use.
  • This is called the “common” value of an object.

(3) Uncertainty

  • The third variable is uncertainty.
  • For instance, which bidder has what information about the object, or even the value another bidder associates with the object.

The theory

  • Wilson developed the theory for auctions of objects with a common value — a value which is uncertain beforehand but, in the end, is the same for everyone”.
  • Wilson showed what the “winner’s curse” is in an auction and how it affects bidding.
  • As shown in the illustration, it is possible to overbid — $50 when the real value is closer to $25. In doing so, one wins the auction but loses out in reality.
  • Milgrom “formulated a more general theory of auctions that not only allows common values but also private values that vary from bidder to bidder”.
  • He analysed the bidding strategies in a number of well-known auction formats, demonstrating that a format will give the seller higher expected revenue when bidders learn more about each other’s estimated values.

Significance of Auction theory

  • Throughout history, countries have tried to allocate resources in various ways.
  • Some have tried to do it through political markets, but this has often led to biased outcomes. For Ex: The rationing of essential goods worked in State-controlled economies. People who were close to the bureaucracy and the political class came out ahead of others.
  • Lotteries are another way to allocate resources, but they do not ensure that scarce resources are allocated to people who value it the most.
  • Auctions, for a good reason, have been the most common tool for thousands of years used by societies to allocate scarce resources.
  • When potential buyers compete to purchase goods in an auction, it helps sellers discover those buyers who value the goods the most.
  • Further, selling goods to the highest bidder also helps the seller maximise his or her revenues. So, both buyers and sellers benefit from auctions.
  • Whether it is the auction of spectrum waves or the sale of fruits and vegetables, auctions are at the core of allocation of scarce resources in a market economy.

What are the criticisms levelled against auctions and what are the economists contribution?

1.Issue of Winner’s Curse

  • The most common one is that auctions can lead buyers to overpay for resources whose value is uncertain to them.
  • This criticism, popularly known as the ‘winner’s curse’, is based on a study that showed how buyers who overpaid for U.S. oil leases in the 1970s earned low returns. Dr. Wilson was the first to study this matter.
  • The rational bidders may decide to underpay for resources in order to avoid the ‘winner’s curse’, and Dr. Wilson argued that sellers can get better bids for their goods if they share more information about it with potential buyers

2.Auction formats

  • Economists traditionally working on auction theory believed that all auctions are the same when it comes to the revenues that they managed to bring in for sellers. The auction format, in other words, did not matter.
  • This is known as the ‘revenue equivalence theorem’.
  • But Dr. Milgrom showed that the auction format can actually have a huge impact on the revenues earned by sellers.
  • The most famous case of an auction gone wrong for the seller was the spectrum auction in New Zealand in 1990.
  • In what is called a ‘Vickrey auction’, where the winner of the auction is mandated to pay only the second-best bid, a company that bid NZ$1,00,000 eventually paid just NZ$6 and another that bid NZ$70,00,000 only paid NZ$5,000.
  • In particular, Dr. Milgrom showed how Dutch auctions, in which the auctioneer lowers the price of the product until a buyer bids for it, can help sellers earn more revenues than English auctions.
  • In the case of English auctions, the price rises based on higher bids submitted by competing buyers. But as soon as some of the bidders drop out of the auction as the price rises, the remaining bidders become more cautious about bidding higher prices.

Conclusion

  • The contributions of Dr. Milgrom and Dr. Wilson have helped governments and private companies design their auctions better.
  • This has, in turn, helped in the better allocation of scarce resources and offered more incentives for sellers to produce complex goods.

By Root

Caretaker @civilsdaily

Nobel and other Prizes

What is World Food Programme?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : World Food Programme

Mains level : Not Much

The Nobel Peace Prize was awarded to the World Food Programme (WFP) for feeding millions of people from Yemen to North Korea, with the coronavirus pandemic seen pushing millions more into hunger.

Tap here to read more about Nobel Prizes here at:

Nobel and other Prizes

World Food Programme

  • The WFP is the food-assistance branch of the United Nations and the world’s largest humanitarian organization focused on hunger and food security.
  • Founded in 1961, it is headquartered in Rome and has offices in 80 countries.
  • In addition to emergency food aid, WFP focuses on relief and rehabilitation, development aid, and special operations, such as making food systems more resilient against climate change and political instability.
  • It is an executive member of the United Nations Development Group, which collectively aims to fulfil the 17 Sustainable Development Goals (SDG), and has prioritized achieving SDG 2 for “zero hunger” by 2030.

By Root

Caretaker @civilsdaily

Nobel and other Prizes

Nobel Prize in Chemistry for CRISPR Technology

Note4Students

From UPSC perspective, the following things are important :

Prelims level : CRISPR, Cas9

Mains level : Gene Editing

French-American duo Emmanuelle Charpentier and Jennifer Doudna have been awarded the 2020 Nobel Prize for the chemistry of CRISPR, which allows scientists to ‘cut-paste’ inside a genetic sequence.

Try this PYQ:

Q.What is Cas9 protein that is often mentioned in news?

(a) A molecular scissors used in targeted gene editing

(b) A biosensor used in the accurate detection of pathogens in patients

(c) A gene that makes plants pest-resistant

(d) A herbicidal substance synthesized in genetically modified crops

The CRISPR technology

  • The CRISPR is an acronym for Clustered Regularly Interspaced Short Palindromic Repeats, developed in the year 2012
  • CRISPR has made gene editing very easy and simple, and at the same time extremely efficient.
  • The technology works in a simple way — it locates the specific area in the genetic sequence which has been diagnosed to be the cause of the problem, cuts it out, and replaces it with a new and correct sequence that no longer causes the problem.
  • The technology replicates a natural defence mechanism in some bacteria that use a similar method to protect itself from virus attacks.

Working of CRISPR

  • An RNA molecule is programmed to locate the particular problematic sequence on the DNA strand.
  • A special protein called Cas9, often described in popular literature as ‘genetic scissor’, is used to break and remove the problematic sequence.
  • A DNA strand, when broken, has a natural tendency to repair itself. But the auto-repair mechanism can lead to the re-growth of a problematic sequence.
  • Scientists intervene during this auto-repair process by supplying the desired sequence of genetic codes, which replaces the original sequence.
  • It is like cutting a portion of a long zipper somewhere in between and replacing that portion with a fresh segment.
  • Because the entire process is programmable, it has a remarkable efficiency and has already brought almost miraculous results.

Uses of CRISPR

  • There are a whole lot of diseases and disorders, including some forms of cancer, that are caused by an undesired genetic mutation.
  • These can all be fixed with this technology. There are vast applications elsewhere as well. Genetic sequences of disease-causing organisms can be altered to make them ineffective.
  • Genes of plants can be edited to make them withstand pests, or improve their tolerance to drought or temperature.

Ethical concerns

  • In November 2018, a Chinese researcher in Shenzen created an international sensation with his claim that he had altered the genes of a human embryo that eventually resulted in the birth of twin baby girls.
  • This was the first documented case of a ‘designer babies’ being produced using the new gene-editing tools like CRISPR.
  • What made matters worse was that the gene-editing was probably done without any regulatory permission or oversight.

By Root

Caretaker @civilsdaily

Nobel and other Prizes

[op-ed snap] Nobel for poverty warriors

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nobel in Economics

Mains level : New approach to Poverty

Context

So far, development economics has treated the poor either as lifeless objects that could be moved around or seen as unable to make the best of opportunities that governments offered them. 

Novel approach

    • The three development economists who have been awarded the 2019 Nobel Prize for Economics have overturned that status quo. 
    • They have redeveloped the field of development economics with the aid of new experimental methods that put researchers in direct contact with the poor. 
    • This was started by Angus Deaton, who won the Economics Nobel in 2015 for his work on the consumption choices of the poor as well as how to accurately measure poverty

Vanguards of change

    • From the view of poor – Development challenges are now viewed through an appropriate lens, the lives of the poor rather than large statistical models, with a special focus on how incentives, information, and constraints shape actual choices. 
    • RCTs – Their use of randomized control trials has lent credibility to poverty research and helped solve old riddles of causality. 
    • Evidence-based – Their expertise has led to the formulation of policies that go by evidence, not assumptions.

Result

    • Huge insights – The result has been a burst of insights and fresh answers to good questions. 
    • Few examples
      • Does microfinance actually boost entrepreneurship among the poor? 
      • Why do the poor spend so much on entertainment? 
      • How does subsidized healthcare impact the investment that have-nots make in their own health? 

Critics

    • Universality – Some argue that the findings may not be universally applicable. 
    • Policy maker’s challenge – Tracing the causal links of one phenomenon to another could baffle those who frame policy. It really doesn’t help knowing if today’s farm investments in technology depend on whether the area’s land tenure system was based on zamindari or ryotwari a hundred years ago.
    • Field trials – Field trials tend to miss the big structural changes that influence the political economy of a country.

The  big lesson – Developing Economies

    • They published a 2005 paper Growth Theory through the Lens of Development Economics
    • They argue that people and firms in developing economies are unable to adopt modern tools and make the most of all that’s available.
    • They are held back by things such as government failure, lack of access to credit, behavioral snags and factors beyond their control. 
    • Aim of development policy – It should be to identify these constraints and figure out how to ease them. 

Conclusion

Banerjee, Duflo, and Kremer have shifted the spotlight from grand plans to actual poverty as a lived reality in all its microscopic detail.

By Root

Caretaker @civilsdaily

Nobel and other Prizes

[op-ed snap] Prize for peace

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Nobel Peace Prize

Context

The Norwegian Nobel Committee’ awarded this year’s Peace Prize to Abiy Ahmed, the Prime Minister of Ethiopia.

Reasons for the prize

  • It is a recognition of his efforts for peace in East Africa.
  • Mr. Abiy, became Prime Minister in April 2018 after his predecessor Hailemariam Desalegn resigned amid a political crisis and social unrest.
  • He has taken steps to politically stabilise the country and establish peace on its borders
  • The committee recognised his “decisive initiative to resolve the border conflict with neighbouring Eritrea”. 

Conflict with Eritrea

  • Eritrea gained independence from Ethiopia in 1991 and has fought a disastrous border war during 1998-2000 with its big neighbour. 
  • It split thousands of families and killed about 80,000 people. 
  • In Eritrea, the dictatorship used the prolonged border conflict as a convenient excuse for conscription and repression of its critics leading to a mass refugee outflow. 
  • Mr. Abiy took steps to resume the stalled peace process. He led Ethiopia’s first state visit to Eritrea and met its President, Isaias Afwerki. Within days both countries declared the end of the border war.

Reforms at home

  • He also initiated reforms at home, such as lifting the ban on opposition political parties, releasing political prisoners and jailed journalists and removing media curbs. 
  • Half of his Cabinet members are women and his government has welcomed the dissidents who were living in exile to return. 
  • Mr. Abiy, himself hailing from the Oromo ethnic group, persuaded the Oromo Liberation Front to join a wide-ranging peace process with the government. 

Challenges ahead

  • His biggest challenge is to calm ethnic tensions in his conflict-ridden country. 
  • Ethiopia is a multi-ethnic federation ruled by the Ethiopian People’s Revolutionary Democratic Front with a tight grip. 
  • Mr. Abiy has loosened this grip and called for a pan-Ethiopian identity and a freer economy and polity
  • His reform agenda was challenged by ethno-nationalists both within and outside his party. 
  • His government remained a spectator when ethnic violence was unleashed in several parts of the country over the past year, and sub-nationalisms emerged stronger. 
  • The Oromia and Amhara regions remain tense. Ethnic Gedeos and Gujis are in conflict in the south. Earlier this year, at least 5,22,000 Ethiopians were displaced by ethnic conflicts. 
  • The country is set to go to elections next year. Many fear that violence could escalate. 

Conclusion

Being a Nobel peace prize winner, he should come up with a national action plan to end violence, ease ethnic tensions and resettle the thousands displaced by the violence. 

By Root

Caretaker @civilsdaily

Nobel and other Prizes

[op-ed snap] How things work

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nobel Prize winners and discoveries

Mains level : Frontiers of science

Context

The first Nobel prizes of this year are announced.

The prize

  • The prize honors fundamental discoveries of the processes which run the universe and living things in it. 
  • The prizes also look ahead to a better and more interesting future

Physiology

  • William G Kaelin Jr, Sir Peter J Ratcliffe, and Gregg L Semenza have won the prize for physiology or medicine for discovering the pathways by which cells adapt to oxygen availability.
  • It is of considerable medical use towards understanding cellular respiration.
  • It is the most significant step since 1937 when Hans Adolf Krebs and William Arthur Johnson discovered the cycle mediated by ATP, which powers life.

Physics

  • Half of the prize in physics went to James Peebles, whose theoretical framework describing the universe from the Big Bang to the present underpins all of physical cosmology. 
  • He concluded that we can sense only 5% of the universe. The rest is dark matter and dark energy, whose presence can only be inferred by their influence on phenomena. 
  • The other half of the physics Nobel prize is shared by Michel Mayor and Didier Queloz, for the discovery in 1995 of the first exoplanet, orbiting the star 51 Pegasi
  • Their technique, using Doppler spectroscopy, supplemented the traditional transit method and has led to the discovery of 4,000 planets circling distant suns.

Conclusion

Is there life on exoplanets? Peebles appears to be convinced that even if there is, we may not recognise it, because it may not use Hans Krebs’ cycle at all.

By Root

Caretaker @civilsdaily

Cells’ Toolbox for DNA repair honoured with Nobel Prize in Chemistry


The Nobel Prize in Chemistry 2015 is awarded to Tomas Lindahl (UK), Paul Modrich (USA) and Aziz Sancar (USA) for having mapped, at a molecular level, how cells repair damaged DNA and safeguard the genetic information.

Their work has provided fundamental knowledge of how a living cell functions and is, for instance, used for the development of new cancer treatments.

What’s the DNA repair toolbox ?

Each day our DNA is damaged by UV radiation, free radicals and other carcinogenic substances, but even without such external attacks, a DNA molecule is inherently unstable.

Thousands of spontaneous changes to a cell’s genome occur on a daily basis. Furthermore, defects can also arise when DNA is copied during cell division, a process that occurs several million times every day in the human body.

The reason our genetic material does not disintegrate into complete chemical chaos is that a host of molecular systems continuously monitor and repair DNA.

The Nobel laureate scientists, who have mapped how several of repair systems function at a detailed molecular level.



 

Tomas Lindahl – Puts together the pieces of base excision repair

In the early 1970s, scientists believed that DNA was an extremely stable molecule, but Tomas Lindahl demonstrated that DNA decays at a rate that ought to have made the development of life on Earth impossible. This insight led him to discover a molecular machinery, base excision repair, which constantly counteracts the collapse of our DNA.

This was the start of 35 years of successful work, during which Tomas Lindahl has found and examined many of the proteins in the cell’s toolbox for DNA repair.

Bit by bit, Lindahl pieced together a molecular image of how base excision repair functions, a process in which glycosylases, enzymes similar to the one he had found in 1974, are the first step in the DNA repair process.

Base excision repair also occurs in human beings and, in 1996, Tomas Lindahl managed to recreate the human repair process in vitro.

The decisive factor for Tomas Lindahl was the realisation that DNA inevitably undergoes change, even when the molecule is located in the cell’s protective environment. However, it had long been known that DNA can be damaged by environmental assaults such as UV radiation.

The mechanism used by the majority of cells to repair UV damage, nucleotide excision repair, was mapped by Aziz Sancar, born in Savur, Turkey, and professionally active in the USA.

Base Excision repair

Aziz Sancar’s Nucleotide excision repair

Aziz Sancar has mapped nucleotide excision repair, the mechanism that cells use to repair UV damage to DNA. People born with defects in this repair system will develop skin cancer if they are exposed to sunlight. The cell also utilises nucleotide excision repair to correct defects caused by mutagenic substances, among other things.

Aziz Sancar’s ability to generate knowledge about the molecular details of the process changed the entire research field. He published his findings in 1983.

He mapped the next stages of nucleotide excision repair. In parallel with other researchers, including Tomas Lindahl, Sancar investigated nucleotide excision repair in humans.

The molecular machinery that excises UV damage from human DNA is more complex than its bacterial counterpart but, in chemical terms, nucleotide excision repair functions similarly in all organisms.

nucleotide_excision_repair

 

Paul Modrich – illustrating DNA mismatch repair

Once his father, a biology teacher, said: “You should learn about this DNA stuff.” This was in 1963, the year after James Watson and Francis Crick had been awarded the Nobel Prize for discovering the structure of DNA.

A few years later, that “DNA stuff” really became central to Paul Modrich’s life.

Paul Modrich has demonstrated how the cell corrects errors that occur when DNA is replicated during cell division. This mechanism, mismatch repair, reduces the error frequency during DNA replication by about a thousandfold. Congenital defects in mismatch repair are known, for example, to cause a hereditary variant of colon cancer.

In conclusion, the basic research carried out by the 2015 Nobel Laureates in Chemistry has not only deepened our knowledge of how we function, but could also lead to the development of lifesaving treatments.

In the words of Paul Modrich: “That is why curiosity-based research is so important. You never know where it is going to lead… A little luck helps, too.”


 


Irish-born William Campbell and Japan’s Satoshi Omura won half of the prize for discovering avermectin, a derivative of which has been used to treat hundreds of millions of people with river blindness and lymphatic filariasis, or elephantiasis.

China’s Tu Youyou was awarded the other half of the prize for discovering artemisinin, a drug that has slashed malaria deaths and has become the mainstay of fighting the mosquito-borne disease. She is China’s first Nobel laureate in medicine.

Lets’s talk about Satoshi Omura’s invention

Satoshi Ōmura

So, how did the journey start for Satoshi Omura?

Satoshi Omura, a Japanese microbiologist and expert in isolating natural products, focused on a group of bacteria, Streptomyces, which lives in the soil and was known to produce a plethora of agents with antibacterial activities (including Streptomycin discovered by Selman Waksman, Nobel Prize 1952).

Equipped with extraordinary skills in developing unique methods for large-scale culturing and characterization of these bacteria, Omura isolated new strains of Streptomyces from soil samples and successfully cultured them in the laboratory.

From many thousand different cultures, he selected about 50 of the most promising, one of these cultures later turned out to be Streptomyces avermitilis, the source of Avermectin, a medicine that has nearly eradicated river blindness and radically reduced the incidence of filariasis, which can cause the disfiguring swelling of the lymph system in the legs and lower body known as elephantiasis.

 

Bacteria.


Puzzle about River Blindness?

Also known as onchocerciasis or Robles’ Disease, is caused by transmission of the parasitic worm Onchocerca volvulus by black flies of the genus Simulium. Vector lives near rivers, thus the name.Inside the host, the worms create larvae that travel to the skin, and infect other flies that bite the victim.

Symptoms include severe itching, eruptions under the skin, and blindness. About 17-25 million are infected; some 0.8 million have some degree of vision loss. Most infections in sub-Saharan Africa.

Then, what about Lymphatic Filariasis or Commonly known as elephantiasis ?

It is tropical disease caused by transmission of parasites classified as nematodes (roundworms) of the family Filariodideato, to humans by mosquitoes.

Adult worms lodge in lymphatic system and disrupt immune system. Causes abnormal enlargement of body parts, pain, severe disability and social stigma.

Over 120 million people are infected, about 40 million disfigured or incapacitated. About 1.23 billion in 58 countries are threatened, 80% of whom live in 10 countries, including India, Bangladesh and Nepal.


Our next Pioneer William C. Campbell

William C. Campbell

An expert in parasite biology working in the USA, acquired Omura’s Streptomyces cultures and explored their efficacy.

Campbell showed that a component from one of the cultures was remarkably efficient against parasites in domestic and farm animals.

The bioactive agent was purified and named Avermectin, which was subsequently chemically modified to a more effective compound called Ivermectin. 

Ivermectin was later tested in humans with parasitic infections and effectively killed parasite larvae (microfilaria) .

Collectively, Omura and Campbell’s contributions led to the discovery of a new class of drugs with extraordinary efficacy against parasitic diseases.

 

Scheme.


 

What a breakthrough, China’s first Nobel laureate in medicine, Let’s talk about it?

 

Youyou Tu

Ms. Youyou Tu, won Nobel in Medicine for a therapy against malaria.

Malaria was traditionally treated by chloroquine or quinine, but with declining success. By the late 1960s, efforts to eradicate Malaria had failed and the disease was on the rise.

At that time, Youyou Tu in China turned to traditional herbal medicine to tackle the challenge of developing novel Malaria therapies.

Tu revisited the ancient literature and discovered clues that guided her in her quest to successfully extract the active component from Artemisia annua. 

Tu was the first to show that this component, later called Artemisinin, was highly effective against the Malaria parasite, both in infected animals and in humans.

Artemisinin represents a new class of antimalarial agents that rapidly kill the Malaria parasites at an early stage of their development, which explains its unprecedented potency in the treatment of severe Malaria.

 

Herbal medicine


 

How do you think these inventions will change the world?

The discoveries of Avermectin and Artemisinin have fundamentally changed the treatment of parasitic diseases.

Ivermectin is highly effective against a range of parasites, has limited side effects and is freely available across the globe.

The importance of Ivermectin for improving the health and wellbeing of millions of individuals with River Blindness and Lymphatic Filariasis, primarily in the poorest regions of the world, is immeasurable.

Treatment is so successful that these diseases are on the verge of eradication, which would be a major feat in the medical history of humankind. Malaria infects close to 200 million individuals yearly.

Artemisinin is used in all Malaria-ridden parts of the world. When used in combination therapy, it is estimated to reduce mortality from Malaria by more than 20% overall and by more than 30% in children. For Africa alone, this means that more than 100 000 lives are saved each year.

The discoveries of Avermectin and Artemisinin have revolutionized therapy for patients suffering from devastating parasitic diseases.

Campbell, Ōmura and Tu have transformed the treatment of parasitic diseases. The global impact of their discoveries and the resulting benefit to mankind are immeasurable.

Published with inputs from Arun

By Root

Caretaker @civilsdaily

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