The 2007 Nobel Prize in economics was awarded to Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson for work that helps explain situations in which markets work well, the Royal Swedish Academy of Sciences announced Monday.

The Academy awarded the prize to the three laureates "for having laid the foundations of mechanism design theory."

"Mechanism design theory, initiated by Leonid Hurwicz and further developed by Eric Maskin and Roger Myerson, has greatly enhanced our understanding of the properties of optimal allocation mechanisms in such situations, accounting for individuals' incentives and private information," said the Academy in a statement.

The Nobel jury said that their theory allows economists, governments and businesses to "distinguish situations in which markets work well from those in which they do not."

Born in Moscow, Russia, in 1917, Leonid Hurwicz is Regents Professor Emeritus of Economics at University of Minnesota.

Eric S. Maskin, born in 1950 in New York City, is the Albert O. Hirschman Professor of Social Science, at the Institute for Advance Study, Princeton University.

Roger B. Myerson was born in Boston in 1951 and is currently the Glen A. Lloyd Distinguished Service Professor at University of Chicago.

The economics prize wraps up this year's Nobels after medicine and physics, chemistry, literature and peace.

The economics award is not one of the original Nobel Prizes. It was created in 1968 by the Swedish central bank, Sveriges Riksbank, in Nobel's memory.

The prize is awarded by the Royal Swedish Academy of Sciences in accordance with the same principles as those governing all other Nobel Prizes.

Nobel Prize winners receive 10 million Swedish kronor (about 1.53 million US dollars), a gold medal and diploma from the Swedish king on Dec. 10, the anniversary of Nobel's death in 1896.