from Wimpy to Strangelove
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Robert Aumann - Nobel prize in Economic Science, 2005. Science? How can it be since there are no repeatable experiments in Economics, are there?. See the Comment for details, including the connection with Stanley Kubrick, Peter Sellers and Dr. Strangelove.
In those days, "how I learned to stop worrying and love the bomb" resonated differently than it does now, when indeed, we have stopped worrying, sort of, and have learned to love it ... in a way ... yes.
Down.
Robert Aumann - Nobel prize in Economic Science, 2005. Science? How can it be since there are no repeatable experiments in Economics, are there?. See the Comment for details, including the connection with Stanley Kubrick, Peter Sellers and Dr. Strangelove.
In those days, "how I learned to stop worrying and love the bomb" resonated differently than it does now, when indeed, we have stopped worrying, sort of, and have learned to love it ... in a way ... yes.
Down.
October 11, 2005 - Louis Uchitelle - The New York Times
American and Israeli Share Nobel Prize in Economics
Robert J. Aumann and Thomas C. Schelling won the Nobel Memorial Prize in Economic Science yesterday for their work in game theory, which explains the choices that competitors make in situations that require strategic thinking.
Their work has helped to illuminate the dynamics in labor negotiations, business transactions and arms negotiations, among other situations. An article that Mr. Schelling wrote prompted the director Stanley Kubrick to make the movie "Dr. Strangelove," consulting with Mr. Schelling during the filming.
The Royal Swedish Academy of Science announced in Stockholm that Mr. Aumann, 75, an Israeli who teaches at the Hebrew University of Jerusalem, and Mr. Schelling, 84, an American who is a professor emeritus at the University of Maryland, had been honored "for having enhanced our understanding of conflict and cooperation through game-theory analysis."
The two men will share a $1.3 million prize.
The winners were a surprise. Neither man's name figured in the speculation concerning who this year's winners might be, and game theory has not been recognized in the Nobel awards since 1994, when three scholars, John F. Nash Jr., John C. Harsanyi and Reinhard Selten, shared the prize. The Nobel judges said that the work of Mr. Schelling and Mr. Aumann "was essential in developing noncooperative game theory further and bringing it to bear on major questions in the social sciences."
Game theory departs from mainstream economics, which assumes that people behave rationally and act independently of one another. Game theorists assume that in a given situation people are affected by what other people do or what they imagine others will do, particularly when their goals are conflicting.
From a game theorist's point of view, for example, the Oslo accords negotiated between the Palestinians and the Israelis were a success in part because the negotiations proceeded in small steps. Each side made small concessions and the other reciprocated, but neither would make a big concession. In the case of a big concession, there could be considerable damage if the other side did not reciprocate.
"The Oslo peace process was this process of doing little things over a period of time," said Avinash Dixit, a Princeton University economist.
Mr. Aumann and Mr. Schelling worked in different areas of game theory, with Mr. Schelling, an economist, building a reputation as a big-picture thinker and Mr. Aumann, a mathematician, becoming known as a master technician who developed formal techniques for analyzing real-world behavior.
"Robert Aumann is a genuine game theorist," Mr. Schelling said in a phone interview, "while I am just a user of game theory when I find it helpful."
Because the Nobel prize committee had a wrong telephone number for Mr. Schelling's home in Bethesda, he did not receive the news until moments before it was announced at 7 a.m. yesterday.
At a news conference in Jerusalem, Mr. Aumann said that he was also surprised, and moved.
"This prize is not just for me," he said. "It is for the entire school of thought that we have developed here in Israel, turning Israel into the leading authority in this field."
Mr. Aumann, who was born in Frankfurt and fled with his family to New York in 1938, was educated at City College of New York and the Massachusetts Institute of Technology, where he received his doctorate in 1955. Almost immediately, he emigrated to Israel, joining Hebrew University, where he has spent his entire career. He and his wife, Esther, who died seven years ago, had five children, one of whom, Shlomo, was killed in Lebanon in 1982 while serving in the Israeli army.
Mr. Schelling's professional life was more nomadic. Born in Oakland, Calif., he was educated at the University of California, Berkeley, and then mixed graduate school and diplomacy. While he was still working on his doctoral thesis for Harvard in the late 1940's and early 1950's, he worked as a government economist - in Washington and Europe - helping to carry out the Marshall Plan and to negotiate international agreements. He joined the Harvard faculty in 1958 and shifted to the University of Maryland in 1990. He and his wife, Alice, have six children.
His best-known work, "The Strategy of Conflict," published in 1960, reflected his government work. It argued that nations, companies or individuals bargain in the context of conflicting and common interests and they bargain most effectively when they take these into account. "It was my effort to cope with practical problems like arms control through a style of analysis that could be called game theory," he said.
A magazine article he wrote in 1960 brought him attention. The theme was accidental war, and Mr. Schelling reviewed three fictional accounts of nuclear disaster, one of them the novel "Red Alert" by Peter George. The article caught Mr. Kubrick's eye and he turned "Red Alert" into "Dr. Strangelove."
In the movie, neither the Soviet premier nor the American president wanted a nuclear conflagration, but that happened because neither had full knowledge of the other's situation and intentions. The Soviets, for example, had an automated nuclear device, unbeknown to the Americans. "One obvious point in the Strangelove movie was that the Soviet doomsday thing was not a deterrent," Mr. Schelling said, "when the other side did not know in advance that it existed." That was the game theory insight.
"By the time the movie came out, there was a hot line in place between Moscow and Washington," Mr. Schelling added. "When 'Red Alert' was published, there was no hot line."
Here's a bit of Game Theory in practice:
My grandfather used to tell us a story of his childhood. His little brother would always follow him around. My grandfather once threw a brick through a window. He said to his little brother, "Let's get out of here". The lady that lived in the house owned a bulldog and she released it on them.
I asked my grandfather if he could outrun the dog. He said, "No, but I could outrun my little brother."