|Animated Cliperts Of Nobel Prize-2013|
The Nobel Prize in Physiology or Medicine 2013:James E. Rothman, Randy W. Schekman, Thomas C. Südhof:
The Nobel Assembly at Karolinska Institutet has today decided to award The 2013 Nobel Prize in Physiology or Medicine jointly to
James E. Rothman, Randy W. Schekman
and Thomas C. Südhof
for their discoveries of machinery regulating vesicle traffic, a major transport system in our cells
The 2013 Nobel Prize honours three scientists who have solved the mystery of how the cell organizes its transport system. Each cell is a factory that produces and exports molecules. For instance, insulin is manufactured and released into the blood and chemical signals called neurotransmitters are sent from one nerve cell to another. These molecules are transported around the cell in small packages called vesicles. The three Nobel Laureates have discovered the molecular principles that govern how this cargo is delivered to the right place at the right time in the cell.
Randy Schekman discovered a set of genes that were required for vesicle traffic. James Rothman unravelled protein machinery that allows vesicles to fuse with their targets to permit transfer of cargo. Thomas Südhof revealed how signals instruct vesicles to release their cargo with precision.Through their discoveries, Rothman, Schekman and Südhof have revealed the exquisitely precise control system for the transport and delivery of cellular cargo. Disturbances in this system have deleterious effects and contribute to conditions such as neurological diseases, diabetes, and immunological disorders.
How cargo is transported in the cell
In a large and busy port, systems are required to ensure that the correct cargo is shipped to the correct destination at the right time. The cell, with its different compartments called organelles, faces a similar problem: cells produce molecules such as hormones, neurotransmitters, cytokines and enzymes that have to be delivered to other places inside the cell, or exported out of the cell, at exactly the right moment. Timing and location are everything. Miniature bubble-like vesicles, surrounded by membranes, shuttle the cargo between organelles or fuse with the outer membrane of the cell and release their cargo to the outside. This is of major importance, as it triggers nerve activation in the case of transmitter substances, or controls metabolism in the case of hormones. How do these vesicles know where and when to deliver their cargo?
Traffic congestion reveals genetic controllers
Randy Schekman was fascinated by how the cell organizes its transport system and in the 1970s decided to study its genetic basis by using yeast as a model system. In a genetic screen, he identified yeast cells with defective transport machinery, giving rise to a situation resembling a poorly planned public transport system. Vesicles piled up in certain parts of the cell. He found that the cause of this congestion was genetic and went on to identify the mutated genes. Schekman identified three classes of genes that control different facets of the cell´s transport system, thereby providing new insights into the tightly regulated machinery that mediates vesicle transport in the cell.
Thomas Südhof is interested in how synapses are formed and function during development and in the adult. His work focuses on the role of synaptic cell-adhesion molecules in shaping synapse properties, on pre- and postsynaptic mechanisms of membrane traffic, and on impairments in synapse formation and function in neuropsychiatric disorders. To address these questions, Südhof's laboratory employs approaches ranging from biophysical and biochemical studies to the physiological and behavioral analyses of mutant mice and the in vitro derivation of human neurons.
Neurons communicate with each other by synaptic transmission at specialized intercellular junctions called synapses. Synapses form not only during development, but throughout life. Synapses transmit, process, and store information in brain. During synaptic transmission, a presynaptic neuron releases a chemical neurotransmitter that is recognized by the postsynaptic neuron. Neurotransmitter release is triggered when an action potential opens voltage-gated Ca2+ channels and Ca2+ flows into the presynaptic terminal. Ca2+ triggers neurotransmitter release by stimulating the fusion of synaptic vesicles (abundant secretory vesicles that are filled with neurotransmitters) with the presynaptic plasma membrane at the active zone (a specialized plasma membrane section that marks the synapse). Released neurotransmitters then elicit a postsynaptic signal by binding to specific receptors
Docking with precision
James Rothman was also intrigued by the nature of the cell´s transport system. When studying vesicle transport in mammalian cells in the 1980s and 1990s, Rothman discovered that a protein complex enables vesicles to dock and fuse with their target membranes. In the fusion process, proteins on the vesicles and target membranes bind to each other like the two sides of a zipper. The fact that there are many such proteins and that they bind only in specific combinations ensures that cargo is delivered to a precise location. The same principle operates inside the cell and when a vesicle binds to the cell´s outer membrane to release its contents.
Membrane fusion is a fundamental biological process for organelle formation, nutrient uptake, and the secretion of hormones and neurotransmitters. It is central to vesicular transport, storage, and release in many areas of endocrine and exocrine physiology, and imbalances in these processes give rise to important diseases, such as diabetes. We employ diverse biophysical, biochemical, and cell biological approaches to characterize the fundamental participants in intracellular transport processes.
It turned out that some of the genes Schekman had discovered in yeast coded for proteins corresponding to those Rothman identified in mammals, revealing an ancient evolutionary origin of the transport system. Collectively, they mapped critical components of the cell´s transport machinery.
Timing is everything
Thomas Südhof was interested in how nerve cells communicate with one another in the brain. The signalling molecules, neurotransmitters, are released from vesicles that fuse with the outer membrane of nerve cells by using the machinery discovered by Rothman and Schekman. But these vesicles are only allowed to release their contents when the nerve cell signals to its neighbours. How is this release controlled in such a precise manner? Calcium ions were known to be involved in this process and in the 1990s, Südhof searched for calcium sensitive proteins in nerve cells. He identified molecular machinery that responds to an influx of calcium ions and directs neighbour proteins rapidly to bind vesicles to the outer membrane of the nerve cell. The zipper opens up and signal substances are released. Südhof´s discovery explained how temporal precision is achieved and how vesicles´ contents can be released on command.
Vesicle transport gives insight into disease processes
The three Nobel Laureates have discovered a fundamental process in cell physiology. These discoveries have had a major impact on our understanding of how cargo is delivered with timing and precision within and outside the cell. Vesicle transport and fusion operate, with the same general principles, in organisms as different as yeast and man. The system is critical for a variety of physiological processes in which vesicle fusion must be controlled, ranging from signalling in the brain to release of hormones and immune cytokines. Defective vesicle transport occurs in a variety of diseases including a number of neurological and immunological disorders, as well as in diabetes. Without this wonderfully precise organization, the cell would lapse into chaos.
Vesicle Transport Early in the Secretory Pathway
We have developed biochemical assays that measure the early events of polypeptide translocation into the endoplasmic reticulum (ER) and of vesicle-mediated protein transport from the ER to the Golgi apparatus. Transport of secretory and membrane cargo proteins is mediated by diffusible vesicles. The formation of these vesicles in vitro depends on the Sec proteins that were predicted to be involved from genetic and morphological inspection of sec mutant cells. Isolated transport vesicles contain membrane and internal proteins that are targeted to other compartments in the cell, but they are nearly devoid of proteins that are located in the ER. Thus the budding mechanism somehow distinguishes transported from ER-resident proteins. This sorting and budding process is highly evolutionarily conserved; mammalian equivalents of the yeast Sec proteins have been isolated and are known to operate in the same location within the cell.
James E. Rothman was born 1950 in Haverhill, Massachusetts, USA. He received his PhD from Harvard Medical School in 1976, was a postdoctoral fellow at Massachusetts Institute of Technology, and moved in 1978 to Stanford University in California, where he started his research on the vesicles of the cell. Rothman has also worked at Princeton University, Memorial Sloan-Kettering Cancer Institute and Columbia University. In 2008, he joined the faculty of Yale University in New Haven, Connecticut, USA, where he is currently Professor and Chairman in the Department of Cell Biology.
Randy W. Schekman was born 1948 in St Paul, Minnesota, USA, studied at the University of California in Los Angeles and at Stanford University, where he obtained his PhD in 1974 under the supervision of Arthur Kornberg (Nobel Prize 1959) and in the same department that Rothman joined a few years later. In 1976, Schekman joined the faculty of the University of California at Berkeley, where he is currently Professor in the Department of Molecular and Cell biology. Schekman is also an investigator of Howard Hughes Medical Institute.
Basic principles that emerged from these studies in yeast are now being applied to studies of genetic diseases of protein transport.
A combination of genetic and cytologic evaluation of the secretion (sec) mutants has allowed a description of the secretory pathway in Saccharomyces cerevisiae. Protein transport in yeast appears to be mediated by the same organelles and proteins that operate in mammalian cells. Molecular cloning analysis of SEC genes revealed striking structural and functional homology with corresponding mammalian genes.
Vesicles formed in the transport reaction have an electron-dense, 10-nm coat structure that consists of the Sec proteins (Sar1p, Sec23/24p, and Sec13/31p) required in budding. This coat (COPII) resembles another coat complex (COPI) that creates transport vesicles within the Golgi apparatus. Our working model is that the Sec protein subunits of the COPII coat bind to the ER membrane and recruit cargo molecules into a cluster that then dimples the membrane to form a bud. A direct interaction between one of the COPII subunits, Sec24p, and membrane proteins is implicated in the capture of cargo proteins. This capture results in the concentrative sorting of membrane and secretory proteins, the latter being selected by an indirect interaction mediated by various membrane receptor proteins that link the coat to soluble cargo proteins. Fission of the bud from the membrane separates transported from resident proteins.
In addition to a role in cargo selection, the COPII coat is responsible for the membrane shape change that accompanies vesicle budding. Liposomes formulated with phospholipids representative of a yeast ER membrane fraction bind the COPII proteins in the same sequence of events and with the same nucleotide dependence as observed with native ER membrane. Furthermore, COPII buds and vesicles form on the surface of the liposome and capture solute from the interior of the liposome. Other coat protein complexes (clathrin and COPI) display similar budding activity on synthetic membrane liposomes.
Thomas C. Südhof was born in 1955 in Göttingen, Germany. He studied at the Georg-August-Universität in Göttingen, where he received an MD in 1982 and a Doctorate in neurochemistry the same year. In 1983, he moved to the University of Texas Southwestern Medical Center in Dallas, Texas, USA, as a postdoctoral fellow with Michael Brown and Joseph Goldstein (who shared the 1985 Nobel Prize in Physiology or Medicine). Südhof became an investigator of Howard Hughes Medical Institute in 1991 and was appointed Professor of Molecular and Cellular Physiology at Stanford University in 2008.
The Nobel Prize in Physics 2013:
The Nobel Prize in Physics 2013 : François Englert, Peter W. Higgs
The Nobel Prize in Physics 2013 was awarded jointly to François Englert and Peter W. Higgs "for the theoretical discovery of a mechanism that contributes to our understanding of the origin of mass of subatomic particles, and which recently was confirmed through the discovery of the predicted fundamental particle, by the ATLAS and CMS experiments at CERN's Large Hadron Collider"
|Higgs Boson Explanation|
In particle physics, Bosons comprise one of two classes of elementary particles, the other being fermions. The name boson was coined by Paul Dirac to commemorate the contribution of Satyendra Nath Bose in developing, with Einstein, Bose–Einstein statistics—which theorizes the characteristics of elementary particles. Examples of bosons include fundamental particles (i.e., Higgs boson, the four force-carrying gauge bosons of the Standard Model, and the still-theoretical graviton of quantum gravity); composite particles
François, Baron Englert is a Belgian theoretical physicist and 2013 Nobel laureate (shared with Peter Higgs). He is Professor emeritus at the Université libre de Bruxelles (ULB) where he is member of the Service de Physique Théorique. He is also a Sackler Professor by Special Appointment in the School of Physics and Astronomy at Tel-Aviv University and a member of the Institute for Quantum Studies at Chapman University in California. He was awarded the 2010 J. J. Sakurai Prize for Theoretical Particle Physics (with Gerry Guralnik, C. R. Hagen, Tom Kibble, Peter Higgs, and Robert Brout), the Wolf Prize in Physics in 2004 (with Brout and Higgs) and the High Energy and Particle Prize of the European Physical Society (with Brout and Higgs) in 1997 for the mechanism which unifies short and long range interactions by generating massive gauge vector bosons. He has made contributions in statistical physics, quantum field theory, cosmology, string theory and supergravity. He is the recipient of the 2013 Prince of Asturias Award in technical and scientific research, together with Peter Higgs and the CERN.
Englert was awarded the 2013 Nobel Prize in Physics, together with Peter Higgs for the discovery of the Higgs mechanism.The Nobel committee said the following about the award,
“for the theoretical discovery of a mechanism that contributes to our understanding of the origin of mass of subatomic particles, and which recently was confirmed through the discovery of the predicted fundamental particle, by the ATLAS and CMS experiments at CERN’s Large Hadron Collider”.
Peter Ware Higgs, CH, FRS, FRSE (born 29 May 1929) is a Nobel Prize laureate, British theoretical physicist and emeritus professor at the University of Edinburgh.
He is best known for his 1960s proposal of broken symmetry in electroweak theory, explaining the origin of mass of elementary particles in general and of the W and Z bosons in particular. This so-called Higgs mechanism, which was proposed by several physicists besides Higgs at about the same time, predicts the existence of a new particle, the Higgs boson (which was often described as "the most sought-after particle in modern physics. CERN announced on 4 July 2012 that they had experimentally established the existence of a Higgs-like boson, but further work is needed to analyse its properties and see if it has the properties expected from the Standard Model Higgs boson. On 14 March 2013, the newly discovered particle was tentatively confirmed to be + parity and zero spin, two fundamental criteria of a Higgs boson, making it the first known scalar particle to be discovered in nature. The Higgs mechanism is generally accepted as an important ingredient in the Standard Model of particle physics, without which certain particles would have no mass.
The recent potential discovery of the Higgs boson prompted fellow physicist Stephen Hawking to note that he thought that Higgs should receive the Nobel Prize in Physics for his work,which he finally did, shared with François Englert in 2013.
The Nobel Prize in Chemistry 2013 : Martin Karplus, Michael Levitt, Arieh Warshe:
The Nobel prize in chemistry was on Wednesday awarded by the Royal Swedish Academy of Sciences jointly to Martin Karplus ( Harvard University), Michael Levitt (Stanford School of Medicine) and Arieh Warshel (University of Southern California) "for the development of multi-scale models for complex chemical systems".
Nobel Prize In Chemistry 2013 'For Taking Chemistry To Cyberspace':
Chemical experiments ideally take place in labs.But the ability to carry them out in real time through computers has won an Israeli, Austrian and British scientist the Nobel prize for chemistry 2013.
The fact that scientists these days can use computers to carry out experiments has yielded a much deeper understanding of how chemical processes play out. Computer models mirroring real life have become crucial for most advances made in chemistry today. Chemists earlier used to create models of molecules using plastic balls and sticks. Today, the modelling is carried out in computers. The strength of the methods that Karplus, Levitt and Warshel have developed is that they are universal. They can be used to study all kinds of chemistry; from the molecules of life to industrial chemical processes. Scientists can optimize solar cells, catalysts in motor vehicles or even drugs, to take but a few examples.
Experts say the work of Karplus, Levitt and Warshel is ground-breaking because they managed to make Newton's classical physics work side-by-side with the fundamentally different quantum physics. Previously, chemists had to choose to use either or.
RSAS said "This year's Nobel Laureates in chemistry took the best from both worlds and devised methods that use both classical and quantum physics. For instance, in simu-lations of how a drug couples to its target protein in the body, the computer performs quantum theoretical calculations on those atoms in the target protein that interact with the drug. The rest of the large protein is simulated using less demanding classical physics. Today the computer is just as important a tool for chemists as the test tube. Simulations are so realistic that they predict the outcome of traditional experiments".
In one of his publications, Levitt recently wrote about one of his dreams: to simulate a living organism on a molecular level. The Nobel laureates in chemistry 2013 have made it possible to map the mysterious ways of chemistry by using computers. Detailed knowledge of chemical processes makes it possible to optimize catalysts, drugs and solar cells.
Martin Karplus (born March 15, 1930) is an Austrian-born American theoretical chemist. Karplus was a child when his family fled from the Nazi-occupation in Austria; prior to their immigration to the United States, the family was known for being "an intellectual and successful secular Jewish family" in Vienna. He is the Theodore William Richards Professor of Chemistry, emeritus at Harvard University. He is also Director of the Biophysical Chemistry Laboratory, a joint laboratory between the French National Center for Scientific Research and the University of Strasbourg, France.
He received a BA degree from Harvard University in 1950, and a Ph.D. from California Institute of Technology in 1953 while working with Linus Pauling. He was an NSF Postdoctoral Fellow at Oxford University (1953–55) where he worked with Charles Coulson. His brother, Robert Karplus, was an internationally recognised physicist and educator at University of California, Berkeley.
Martin Karplus received the 2013 Nobel Prize in Chemistry, together with Michael Levitt and Arieh Warshel for "the development of multiscale models for complex chemical systems".
Michael Levitt, FRS (born 9 May 1947) is a biophysicist and Professor of Structural biology, Stanford University, California, since 1987.His research is in computational biology and he is a member of the National Academy of Sciences .Levitt received the 2013 Nobel Prize in Chemistry, together with Martin Karplus and Arieh Warshel for "the development of multiscale models for complex chemical systems".
Levitt was one of the first researchers to conduct molecular dynamics simulations of DNA and proteins and developed the first software for this purpose. He is currently well known for developing approaches to predict macromolecular structures, having participated in many Critical Assessment of Techniques for Protein Structure Prediction (CASP) competitions. He has mentored many successful scientists, including Mark Gerstein and Ram Samudrala. Cyrus Chothia was one of his colleagues.
Arieh Warshel is a Distinguished Professor of Chemistry and Biochemistry at the University of Southern California. He received the 2013 Nobel Prize in Chemistry, together with Michael Levitt and Martin Karplus for "the development of multiscale models for complex chemical systems".
Arieh Warshel made major contributions in introducing computational methods for structure function correlation of biological molecules, pioneering and co-pioneering programs, methods and key concepts for detailed computational studies of functional properties of biological molecules including Cartesian-based force field program
the QM/MM method for simulating enzymatic reactions, the first molecular dynamic simulation of a biological process, microscopic electrostatic models for proteins, free energy perturbation in proteins and other key advances. It was for the development of these methods that Warshel shared the 2013 Nobel Prize in Chemistry.
The Nobel Prize in Literature 2013 was awarded to Alice Munro "master of the contemporary short story"..
Alice Ann Munro (born 10 July 1931) is a Canadian author. The recipient of the 2013 Nobel Prize in Literature and the 2009 Man Booker International Prize for her lifetime body of work, she is also a three-time winner of Canada's Governor General's Award for fiction. The focus of Munro’s fiction is her native southwestern Ontario. Her "accessible, moving stories" explore human complexities in a seemingly effortless style. Munro's writing has established her as "one of our greatest contemporary writers of fiction," or, as Cynthia Ozick put it, "our Chekhov.
Many of Munro's stories are set in Huron County, Ontario. Her strong regional focus is one of the features of her fiction. Another is the omniscient narrator who serves to make sense of the world. Many compare Munro's small-town settings to writers of the U.S. rural South. Her female characters, though, are more complex. Much of Munro's work exemplifies the literary genre known as Southern Ontario Gothic.
Munro's work is often compared with the great short story writers. In Munro stories, as in Chekhov's, plot is secondary and "little happens." As with Chekhov, Garan Holcombe notes: "All is based on the epiphanic moment, the sudden enlightenment, the concise, subtle, revelatory detail." Munro's work deals with "love and work, and the failings of both. She shares Chekhov’s obsession with time and our much-lamented inability to delay or prevent its relentless movement forward."
A frequent theme of her work—particularly evident in her early stories—has been the dilemmas of a girl coming of age and coming to terms with her family and the small town she grew up in. In recent work such as Hateship, Friendship, Courtship, Loveship, Marriage (2001) and Runaway (2004) she has shifted her focus to the travails of middle age, of women alone and of the elderly. It is a mark of her style for characters to experience a revelation that sheds light on, and gives meaning to, an event.
Munro's prose reveals the ambiguities of life: "ironic and serious at the same time," "mottoes of godliness and honor and flaming bigotry," "special, useless knowledge," "tones of shrill and happy outrage," "the bad taste, the heartlessness, the joy of it." Her style places the fantastic next to the ordinary with each undercutting the other in ways that simply, and effortlessly, evoke life. As Robert Thacker notes: "
1) Too Much Happiness:
These are beguiling, provocative stories about manipulative men and the women who outwit them, about destructive marriages and curdled friendships, about mothers and sons, about moments which change or haunt a life. Alice Munro's stories surprise and delight, turning lives into art, expanding our world and shedding light on the strange workings of the human heart.
2) Lives of Girls and Women:
The only novel from Alice Munro-award-winning author of The Love of a Good Woman--is an insightful, honest book, "autobiographical in form but not in fact," that chronicles a young girl's growing up in rural Ontario in the 1940's.
Del Jordan lives out at the end of the Flats Road on her father's fox farm, where her most frequent companions are an eccentric bachelor family friend and her rough younger brother. When she begins spending more time in town, she is surrounded by women-her mother, an agnostic, opinionted woman who sells encyclopedias to local farmers; her mother's boarder, the lusty Fern Dogherty; and her best friend, Naomi, with whom she shares the frustrations and unbridled glee of adolescence.
Through these unwitting mentors and in her own encounters with sex, birth, and death, Del explores the dark and bright sides of womanhood. All along she remains a wise, witty observer and recorder of truths in small-town life. The result is a powerful, moving, and humorous demonstration of Alice Munro's unparalleled awareness of the lives of girls and women.
3) Open Secrets:
Open Secrets, Alice Munro’s eighth book, consists of eight matchless stories, each one as rich as a full novel. All of them provide compulsive reading – and rewarding re-reading.
“Perhaps you will be surprised to hear from a person you don’t know and that doesn’t remember your name.” These intriguing words begin a letter dated 1917 to the Librarian in Carstairs, Ontario (the heart of “Alice Munro Country”). The letter sweeps us away into a world of secrets and revelations where nothing – not even a courtship by letter that leads, over time, to a solid marriage – is as it originally seems.
The Ontario stories range from “A Wilderness Station,” which gives an account of an 1852 tree-felling accident and sheds light on the harsh life of the pioneers, all the way to the present, where family names known to us appear again in a world of TV shows and snowmobiles.
Just as the stories range back and forth in time, they also travel far to distant settings. Much of “The Albanian Virgin” is set in a remote mountain area where a Canadian tourist in the 1920s is captured by bandits; her tale of escape is comforting to a Victoria bookseller escaping from her own former life. “The Jack Randa Hotel” brings a deserted wife in cold pursuit to Australia, which leads to another intriguing letter. “Dear Mrs. Thornaby, It has come to my attention that you are dead…”
Things that cannot be explained happen here. In the title story a lawyer’s wife has a flash of insight – illogical, unprovable and terrifying – into the fate of a missing teenager; in another, the appearance of a long-dead visitor reveals the grip of a former love. Yet the true magic lies in the way that Alice Munro makes everything here – unexpected marriages, elopements, acts of sudden vengeance – unfold with the ease of the inevitable. This is the mark of a great writer, and it is stamped on every page of this book.
4) The Moons of Jupiter:
In these piercingly lovely and endlessly surprising stories by one of the most acclaimed current practitioners of the art of fiction, many things happen: there are betrayals and reconciliations, love affairs consummated and mourned. But the true events in The Moons Of Jupiter are the ways in which the characters are transformed over time, coming to view their past selves with an anger, regret, and infinite compassion that communicate themselves to us with electrifying force.
5) The Beggar Maid:
In this series of interweaving stories, Munro recreates the evolving bond between two women in the course of almost forty years. One is Flo, practical, suspicious of other people's airs, at times dismayingly vulgar. the other is Rose, Flo's stepdaughter, a clumsy, shy girl who somehow leaves the small town she grew up in to achieve her own equivocal success in the larger world.
6) Away from Her:
Alice Munro has long been heralded for her penetrating, lyrical prose, and in “The Bear Came Over the Mountain” – the basis for Sarah Polley’s film Away From Her — her prodigious talents are once again on display. As she follows Grant, a retired professor whose wife Fiona begins gradually to lose her memory and drift away from him, we slowly see how a lifetime of intimate details can create a marriage, and how mysterious the bonds of love really are.
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013
Eugene F. Fama, Lars Peter Hansen, Robert J. Shiller
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013 was awarded jointly to Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller "for their empirical analysis of asset prices".
Trendspotting in asset markets:
There is no way to predict the price of stocks and bonds over the next few days or weeks. But it is quite possible to foresee the broad course of these prices over longer periods, such as the next three to five years. These findings, which might seem both surprising and contradictory, were made and analyzed by this year’s Laureates, Eugene Fama, Lars Peter Hansen and Robert Shiller.
Beginning in the 1960s, Eugene Fama and several collaborators demonstrated that stock prices are extremely difficult to predict in the short run, and that new information is very quickly incorporated into prices. These findings not only had a profound impact on subsequent research but also changed market practice. The emergence of so-called index funds in stock markets all over the world is a prominent example.
If prices are nearly impossible to predict over days or weeks, then shouldn’t they be even harder to predict over several years? The answer is no, as Robert Shiller discovered in the early 1980s. He found that stock prices fluctuate much more than corporate dividends, and that the ratio of prices to dividends tends to fall when it is high, and to increase when it is low. This pattern holds not only for stocks, but also for bonds and other assets.
One approach interprets these findings in terms of the response by rational investors to uncertainty in prices. High future returns are then viewed as compensation for holding risky assets during unusually risky times. Lars Peter Hansen developed a statistical method that is particularly well suited to testing rational theories of asset pricing. Using this method, Hansen and other researchers have found that modifications of these theories go a long way toward explaining asset prices.
Another approach focuses on departures from rational investor behavior. So-called behavioral finance takes into account institutional restrictions, such as borrowing limits, which prevent smart investors from trading against any mispricing in the market.
The Laureates have laid the foundation for the current understanding of asset prices. It relies in part on fluctuations in risk and risk attitudes, and in part on behavioral biases and market frictions.
Eugene Francis "Gene" Fama is an American economist, known for his work on portfolio theory and asset pricing, both theoretical and empirical.
Born: February 14, 1939 (age 74), Boston, Massachusetts, United States
Education: Tufts University, University of Chicago, University of Chicago Graduate School of Business
Awards: Deutsche Bank Prize in Financial Economics
Lars Peter Hansen Economic Consultant Lars Peter Hansen is the David Rockefeller Distinguished Service Professor of economics at the University of Chicago.
Born: October 26, 1952 (age 60), Urbana, Illinois, United States
Education: University of Minnesota (1978), Utah State University (1974)
Books: Recursive Linear Models of Dynamic Economies
Awards: Erwin Plein Nemmers Prize in Economics, More
Robert J. Shiller Economist Robert James "Bob" Shiller born March 29, 1946 is an American economist, academic, and best-selling author.
Born: March 29, 1946 (age 67), Detroit, Michigan, United States
Awards: Deutsche Bank Prize in Financial Economics