James Mirrlees

The Mirrlees model asks how a government can redistribute income when it cannot directly observe each person's earning ability or effort. An income tax must balance redistribution against incentives to work, acquire skills, and report taxable income.

Mirrlees shared the prize with William Vickrey for fundamental contributions to the economic theory of incentives under asymmetric information. Mirrlees was particularly influential in optimal taxation, while Vickrey also transformed auction theory.

In Mirrlees's tax framework, the government observes earnings but not the underlying ability and effort that produced them. This information gap turns tax policy into an incentive-design problem rather than a simple exercise in choosing redistribution targets.

One influential result in simplified optimal-tax models is that the marginal tax rate at the very top can be zero under restrictive assumptions. That theoretical endpoint does not mean Mirrlees proved that every real economy should impose a zero top tax rate.