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Prof. Thomas C. Schelling, serial retirer from Harvard and the Univ. of Maryland, shares this year's Bank of Sweden Prize in Economics (sorry - I refuse to use "Economic Sciences") "for having enhanced our understanding of conflict and cooperation through game-theory analysis." (More excerpts from the citation.)
Anyone who has not read The Strategy of Conflict (1960) should drop everything and order a copy. As noted by GMU economist Tyler Cowen:
Before The Strategy of Conflict, game theory was for the most part an abstract desert. It is not easy to find concrete economic propositions in von Neumann and Morgenstern or for that matter in Nash. Tom brought game theory into the real world. The magnitude of this shift is hard to appreciate from the vantage point of today. One of the most appalling gaps in contemporary American legal thought is its abysmal failure to add elementary game theory concepts to its set of analytic tools. The PFF amicus brief in Grokster argued that the case cried out for analysis in terms of the game theory concept of Prisoner's Dilemma. In writing it, I did a Lexis search to find the use of this phrase in Supreme Court opinions. The result was a fat zero. Yet, it is absolutely impossible to think seriously about problems of government and politics without a grasp of the fundamentals of Prisoners Dilemma, which, in the words of William Poundstone:
[H]as great power for explaining why animal and human societies are organized as they are. It is one of the great ideas of the twentieth century, simple enough for anyone to grasp and of fundamental importance. (p. 9.)
posted by James DeLong @ 8:59 AM | Economics, Game Theory & Public Choice
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