Modern Economics
Late 20th and 21st century developments — behavioral economics, game theory, information economics, and mechanism design have reshaped the discipline.
Sub-topics
Humans are not rational utility maximizers. Kahneman, Tversky, and Thaler showed that cognitive biases, heuristics, and framing effects systematically distort economic decisions.
The mathematics of strategic interaction. Von Neumann and Morgenstern (1944) founded it; Nash (1950) generalized equilibrium. Now essential to economics, political science, biology, and AI.
Markets with asymmetric information behave differently than textbook models predict. Adverse selection, moral hazard, and signaling explain insurance markets, used car markets, and credit rationing.
Reverse game theory: given desired outcomes, design the rules of the game. Hurwicz, Maskin, and Myerson won the 2007 Nobel for formalizing incentive-compatible institutional design.