Masahiko Aoki

Masahiko Aoki (April 1, 1938 – July 15, 2015) was a Japanese economist, Tomoye and Henri Takahashi Professor Emeritus of Japanese Studies in the Economics Department, and Senior Fellow of the Stanford Institute for Economic Policy Research and Freeman Spogli Institute for International Studies at Stanford University. Aoki was known for his work in comparative institutional analysis, corporate governance, the theory of the firm, and comparative East Asian development.
Education.
Aoki was born in Nagoya, Aichi Prefecture in 1938. He received his B.A. and M.A. in economics from Tokyo University in 1962 and 1964. In 1967 Aoki received his Ph.D in economics from the University of Minnesota, where he studied under John Chipman and Nobel Laureate Leonid Hurwicz.
Academic career.
Aoki became assistant professor at Stanford University in 1967, Harvard University in 1968, and Kyoto University in 1969, where he remained until his promotion to Professor in 1977. In 1984, he returned to Stanford University as a professor of economics, and became Professor Emeritus of Kyoto University in 2001. In order to focus on research and take a greater role in international activities, he became Professor Emeritus of Stanford University in 2004. Since 2011 he served as the Senior Visiting Fellow at the Asian Development Bank Institute in Tokyo. Aoki also held visiting positions at Tokyo University, Keio University, Hitotsubashi University, Harvard University, the London School of Economics, and the Max Planck Institute in Cologne.
Research career.
Aoki's research has been also published in the leading journals in economics, including the "American Economic Review", "Econometrica", the "Quarterly Journal of Economics", "Review of Economic Studies", the "Journal of Economic Literature", "Industrial and Corporate Change", and the "Journal of Economic Behavior and Organizations".
Aoki was the founding editor of the "Journal of the Japanese and International Economies".
Besides authoring five books, Aoki was active in organizing international research projects on various institutional topics and has edited more than ten books for institutions such as the World Bank and the International Economic Association, to which more than 200 scholars from more than 20 countries contributed.
Aoki was President of the Japanese Economic Association from 1995 to 1996, and President of the International Economic Association from 2008 to 2011. He was also a Fellow of the Econometric Society.
Aoki served as President of the Japanese Government's Research Institute of Economy, Trade and Industry (RIETI), where he stressed the necessity of a trans-disciplinary approach to public policy research.
Academic Contributions.
Aoki's major academic contributions to economics and the social sciences in general were in the fields of the comparative institutional analysis, the theory of the firm, and corporate governance.
Comparative institutional analysis.
Aoki's research made him a pioneer and leader in comparative institutional analysis.
Together with Paul Milgrom, Avner Greif, Yingyi Qian, and Marcel Fafchamp, he created a comparative institutional field in the economics department at Stanford in the early 1990s. They conceptualized institutions as equilibrium phenomena in societal games rather than something given exogenously by factors such as law, policy, and culture. From this perspective he laid analytical foundations for basic concepts in institutional analysis such as institutional complementarities, social embedeness (linked games), and public representations mediating the salient features of the state of play and individual beliefs, and applied them to comparative analysis across countries and regions. Aoki was the first to directly apply institutional analysis to Japan, arguing in the late 1980s that institutions such as lifetime employment, the main bank system, long-term supplier relations, and government as an interest group mediator were in mutually complementary, game-theoretic equilibria in the context of Japan's institutional evolution.
In his 2001 work, "Toward a Comparative Institutional Analysis", Aoki developed a conceptual and analytical game theoretic approach to comparative studies of institutions. He used this framework to analyze how institutions evolve, why institutional structures are diverse across economies, and what factors lead to institutional change or rigidity.
Theory of the firm.
"The Cooperative Game Theory of the Firm" (1984) was a first attempt to synthesize and unify various theories of the firm, such as neoclassical, worker controlled, and stakeholder society views, as special cases of corporate governance with varied weights of bargaining power attributed to the members of the firm. Aoki's interests then moved into comparisons of various internal information structures of the firm (hierarchical, horizontal and modular), and its applications to international varieties of corporate firms across Anglo-American, Japanese, German, Silicon Valley, and Chinese systems, as well as to a comparative assessment of nuclear power disasters (Three Mile Island, Chernobyl and Fukushima). These two viewpoints on corporate firms: a game-theoretic approach to corporate governance and information systemic approach to the internal structure of corporate firms are synthesized in Aoki's 2008 Clarendon Lectures, "Corporations in Evolving Diversity". Relying on a recent development of potential game theory, he also showed that sufficient and necessary conditions for corporate stakeholders with different payoff functions to behave as if they have a common objective is that they share a common distributive value (technically represented as Shapley value). This insight places the economic theory of the firm in a broader frame of institutional analysis.
Death.
Aoki died on July 15, 2015, at the age of 77. A Memorial Conference celebrating his life and work was held at Stanford University on December 4, 2015 and included addresses by Kenneth Arrow, Francis Fukuyama, Koichi Hamada, and Dale Jorgenson.