When the phone rang at Eric Maskin's bedside in Princeton in the early hours of Oct. 22, he couldn't quite wake up enough to understand what the caller was trying to tell him.

But then the chairman of the committee for the Nobel Prize in Economics got on the line, and the message became very clear.

The 56-year-old Maskin, an expert in mechanism design theory, had just been awarded the 2007 Nobel Prize in economics. Sharing the $1.56 million prize with him are two colleagues, Leonid Hurwicz of the University of Minnesota and Roger Myerson of the University of Chicago.

"It was quite a shock," Maskin said during a recent interview in his office at the Institute for Advanced Study in Princeton, where he serves as the Albert O. Hirschman Professor in the School of Social Science.

"It's very nice," he said. "Everyone likes to be recognized, and I like that, too. It's wonderful from that point of view."

His pleasure was part of a mix of emotions, Maskin said — sorrow that his parents are no longer alive to enjoy the news, elation that he is sharing the prize with the 90-year-old Hurwicz, who is one of his heroes.

"He's the reason I went into this area of economics," Maskin said. "That's one of the reasons I was so thrilled I could win at the same time. A lot of us in the profession had been hoping for many years that he would win, and he was overlooked till now. So when I heard he had won — what a thrill."

In awarding the prize, the Royal Swedish Academy of Sciences recognized Maskin for "having laid the foundation for mechanism design theory" — work that has broad applications in the areas of finance, industrial organization, and political science.

Asked to explain the impact of mechanism design, Maskin said, "Most of economics is an attempt to look at economic events and try to understand why they happened, and also to try to predict economic events in the future.

"But what I do in mechanism design is, in a sense, the reverse of that," he said. "We start with the outcome we want. Here's a social goal we want to achieve. The question is, how can we build a mechanism — a procedure, a mechanism, an institution, a game — which will lead to this outcome? That, in a paragraph, is what mechanism design is."

Mechanism design theory can be applied to a very wide range of disciplines, according to Maskin. It might be used to design an international agreement on clean air, or to devise an efficient health-care system.

"The essence of mechanism design is trying to reconcile some public good — like peace between Israel and the PLO, for example — and the private aspirations of the parties involved," he said. "Mechanism design helps us to understand to what extent such reconciliation is possible."

Maskin's journey toward his life's work began at Harvard University, where he received his bachelor's, master's, and doctoral degrees. He taught at the Massachusetts Institute of Technology from 1988 to 1984, and then went home to Harvard, where he was named the Louis Berkman Professor of Economics in 1997. Among many other positions, he has served as president of the Econometric Society and as editor of the Quarterly Journal of Economics and Economics Letters.

In addition to his post at the Institute for Advanced Study, which he assumed in 2000, Maskin teaches advanced graduate students at Princeton University as a visiting lecturer with the rank of professor of economics.

A native of New York, Maskin grew up in New Jersey, in a nonreligious Jewish home in the town of Alpine. "I think my father was bar mitzva'd, but somewhat reluctantly," he said, "and I had no religious training at all."

But is he culturally Jewish? "Sure," he said. "It's a very rich culture, and I'm attracted to that side of it. I listen to klezmer — I'm actually a clarinetist myself. And there are certain Jewish foods I'm especially fond of — latkes, chopped liver, chicken soup with matza balls. I like to cook, and a lot of the things I cook have been handed down — a stuffed cabbage recipe I'm fond of, a meat pie recipe. I saw my grandmother do them."

Maskin's wife, Gayle Sawtelle, a lecturer in history at Princeton, and their son, Joseph, 20, and daughter, Charlotte, 17, live in Princeton. Living with them in their white frame house on Mercer Street is the spirit of none other than Albert Einstein. The father of modern physics lived in the house from the time he settled at the Institute for Advanced Study in 1933 until his death in 1955.

"It's very thrilling," Maskin said. "I should say it was just good luck on our part that the house happened to be available. The Einstein family donated it to the institute to be sold to the institute's faculty members and always remain in the institute community.

"I'm tickled by the Einstein connection," he added. "I think there is a benevolent spirit presiding."

The Mercer Street house is said to be the only residence in America where three Nobel laureates have lived — Einstein; physicist Frank Wilczek, who won the Nobel Prize in physics in 2004 while at the institute; and now, Maskin.

As for the meaning of the prize he will receive in Stockholm on Dec. 13, Maskin said, "I don't think it's ultimately going to have an enormous effect on my life. I already had a great life. The institute here where I work is ideal. I like what I do.

"I think the real value of the Nobel Prize socially is not for the winners," he said. "It's not going to make a big difference to their careers, except maybe they'll have a more public voice.

"But the Nobel Prize is very important for the public at large," he said. "There aren't very many occasions when the public gets a peek into the world of basic research in physics, chemistry, economics, or medicine. I think it's great that, at least for a short time, these basic subjects are publicized."