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Thaler, Shiller Favorites to Win Nobel for Economics

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Research into market behavior and the psychology of decision-making could be awarded the Nobel prize for economics on Monday and improve the weak U.S. representation among this year's Nobel laureates.

Nobel Economic Prize
Source: nobelprize.org
Nobel Economic Prize

Betting agency Ladbrokes says American behavioral economists Richard Thaler at the University of Chicago and Robert Shiller of Yale University are the top bets for this year's award.

The 10 million Swedish kronor ($1.5 million) prize is not among the original awards established by Swedish industrialist Alfred Nobel in his 1895 will, but was created in 1968 by the Swedish central bank in his memory.

Thaler is considered a pioneer in behavioral finance, having studied the psychology of decision-making and the behavior of markets, and Shiller is an influential economist who long predicted the U.S. housing bubble.

The economics prize—the last of this year's Nobel announcements—offers the U.S. a chance to boost its meager tally among the 2010 winners. So far there is only one American laureate: Richard Heck who shared the Nobel Prize in chemistry with two Japanese researchers.

Since the economy prize was first awarded in 1969, more than 40 Americans have received it. Last year, Americans Elinor Ostrom and Oliver Williamson won the prize for their work in economic governance, marking the first time ever a woman received the economics award.

"Usually the prize doesn't go to work that is popular right now, or that lies close in time. It absolutely doesn't have to have anything to do with the financial crisis for example," said Hubert Fromlet, a professor in International Economics at the Jonkoping International Business School and Linnaeus University in Sweden.

"Research results have to lie some 20 years or so back in time because that's about the amount of time needed to see whether it's sustainable," he said.

Fromlet's own top picks include American economist Dale Mortensen of Northwestern University, whose research focuses on labor economics.

Other names in this year's speculation include American finance researcher Eugene Fama, French microeconomist Jean Tirole, and American macroeconomists Robert Barro and Paul Romer.

The science unit of Thomson Reuters listed political economics professor Alberto Alesina, economic professors Kevin Murphy, Nohubiro Kiyotaki at Princeton and John Moore as front-runners for this year's award.

Last week, British professor Robert Edwards was awarded the Nobel Prize in medicine for his fertility research that led to the first test tube baby. Russian-born scientists Andre Geim and Konstantin Novoselov won the physics prize for groundbreaking experiments with graphene, the strongest and thinnest material known to mankind.

The chemistry award went to Heck and Japanese researchers Ei-ichi Negishi and Akira Suzuki for designing techniques to bind together carbon atoms.

Peruvian novelist Mario Vargas Llosa won the literature prize and the imprisoned Chinese democracy campaigner Liu Xiaobo was named the winner of the Nobel Peace Prize.

The awards are always handed out on Dec. 10, the anniversary of Nobel's death in 1896.