2005 Nobel prize winners in Economics
These two articles - one by Tim Harford (Financial Times) and the other by Fred Kaplan (Slate) - are worth perusing if you want to read up on Thomas Schelling, this year's co-winner of the Nobel prize in Economics.
The other winner is Robert Aumann, a mathematician and economics theoretician who, among other things, has created complex game theoretic models. Schelling, in contrast to Aumann, is a practitioner of these complicated models and has been highly successful in articulating game theory to laypeople. Plus, his contributions to public policy (see, eg, Kaplan's critical discussion of Schelling's role in the Vietnam war) are a much bigger draw to readers than are Aumann's equally significant, but less titillating contributions.
Hence, there appears to be much more in the newspapers that discusses Schelling's background and contributions than Aumann's. I'll take a stab at providing a "from 30-thousand-feet" example of one of Aumann's important contributions: equilibrium that derive from an infinitely repeated game. Aumann's work provided insight on the distinct outcomes that derive when a non-cooperative game is repeated indefinitely. Take the "prisoner's dilemma" game, which is a single-period game. Given the assumed payoffs, the outcome of a prisoner's dilemma game is typically that the two prisoners tattle on each other and end up in the executioners chair. However, over the long-run (that is if one allows the game to be repeated indefinitely) the conflict observed in the static/single-period game can become one of cooperation; namely, the prisoners come to understand that cooperation is in their best interest. Well, at least, that is the gist of it.
For those that want to read more, the blog Marginal Revolution has this on Aumann and this on Schelling. Dan Drezner responds effectively to Kaplan's critique of Schelling here.
Update: It seems that my Aumann "prisoner's dilemma" example is pontificated (with much greater rigor, I add) in the paper by the Royal Swedish Academy describing the winners' contributions. See, p. 14. Link (pdf document)
The other winner is Robert Aumann, a mathematician and economics theoretician who, among other things, has created complex game theoretic models. Schelling, in contrast to Aumann, is a practitioner of these complicated models and has been highly successful in articulating game theory to laypeople. Plus, his contributions to public policy (see, eg, Kaplan's critical discussion of Schelling's role in the Vietnam war) are a much bigger draw to readers than are Aumann's equally significant, but less titillating contributions.
Hence, there appears to be much more in the newspapers that discusses Schelling's background and contributions than Aumann's. I'll take a stab at providing a "from 30-thousand-feet" example of one of Aumann's important contributions: equilibrium that derive from an infinitely repeated game. Aumann's work provided insight on the distinct outcomes that derive when a non-cooperative game is repeated indefinitely. Take the "prisoner's dilemma" game, which is a single-period game. Given the assumed payoffs, the outcome of a prisoner's dilemma game is typically that the two prisoners tattle on each other and end up in the executioners chair. However, over the long-run (that is if one allows the game to be repeated indefinitely) the conflict observed in the static/single-period game can become one of cooperation; namely, the prisoners come to understand that cooperation is in their best interest. Well, at least, that is the gist of it.
For those that want to read more, the blog Marginal Revolution has this on Aumann and this on Schelling. Dan Drezner responds effectively to Kaplan's critique of Schelling here.
Update: It seems that my Aumann "prisoner's dilemma" example is pontificated (with much greater rigor, I add) in the paper by the Royal Swedish Academy describing the winners' contributions. See, p. 14. Link (pdf document)
posted by david burnstein at 12:05 PM
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