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Sir James Mirrlees has also held Visiting Professorships at MIT, UC Berkeley and Yale. He was President of the Royal Economic Society from 1989 to 1992, and is a fellow of the Econometric Society. He has also been an adviser to the government of China. Sir James Mirrlees shared the Nobel Prize in 1996 with Professor William Vickrey of Columbia University for their fundamental contributions to the economic theory of incentives under asymmetric information. He was knighted for contributions to economic science in 1997. Sir James Mirrlees studied the problem of optimal income taxation in a situation where individual takes the tax schedule into account when choosing his work effort and government does not have information on the productivity of individual citizens. In such a case, a high tax rate will discourage people from working hard while a low tax rate will result in government budget deficits. Sir James Mirrlees developed a well-known theory on optimal tax, balancing efficiency and equity, and taking into account the limited information available to the government. Another significant contribution by Sir James Mirrlees was on the problem of moral hazard. For example, full insurance coverage encourages individuals not to take precautions against risk and as a result lowers the insurance company profits. Sir James Mirrlees devises a mechanism that induces individuals to reveal private information truthfully. His work allows companies to design contract terms that give the agent incentives to act in accordance with the companies' objective of profit maximization. Sir James Mirrlees' work laid the foundation for modern analysis of complex information and incentive problems, which can be applied to many other similar situations.
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