Nobel Prize Winners

Nobel Prize Winners The theories of these five men: John C. Harsanyi, John Nash, Reinhard Selten, Robert W. Fogel, and Douglass C. North, made an abundant progress in the Economic Sciences in America and the economy. For these great accomplishments, these five were awarded the Noble Peace Prize in Economic Sciences in 1994(Harsanyi, Nash, Selten), and 1993(Forgel, North).

The three economists who was awarded the Noble Peace Prize in 1994 for their excellent work and progress in game theory was know as pioneers in using games like chess and poker as the foundation for understanding complex economic issues. This was precisely half a century after John Von Neumann and Osar Morgenstern launched the field with the publication of “The Theory of Games and Economic Behavior.” “John F. Nash of Princeton University(a American economists), John C. Harsanyi of the University of California at Berkeley(a Hungarian economist), and Reinhard Selten of the Rheinische Friedrich- Wilhelms-Universitat in Bonn(a German economists), shared the award, and the $930,000 cash award for their achievements in economics.”1 The trios accomplishment portrayed the significance of Von Neumann and Morgenstern’s contribution to game theory, which was recognized by economists and others almost immediately. The lessons they drew from homely games like chess and poker had exemplified universal application to economic situations in which the participants had the power to anticipate and affect other participants’ actions.

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Harsanyi stated “it is a theory of strategic interactions..of rational behavior in social situations in which each player has to choose his moves on the basis of what he thinks the other players counter moves are likely to be”2 Economists did not have an immediate success in applying their insights to a field whose preoccupation with the idea of”free competition” required that the ability of each particular participant to influence outcomes be negligible. So instead, game theory found all kinds of immediate applications in the 1950’s to problems of the Cold War, everything from airplane dog-fights to doctrines of massive retaliation. “In book ‘”Prisoner’s Dilemma,” writer William Poundstone records the heady intellectual excitement around the Institute for Advanced Study at Princeton and Rand Corp.

in Santa Monica, Calif., which was where much of the early work was done.”3 Nash hinted the first formal breakthrough meanwhile he was still a young instructor at the Massachusetts Institute of Technology.

He succeeded in generalizing a set of problems known to economists since the 1840’s, when Augustine Cournot began writing about what might happen when two big companies collide with one another in the marketplace. Nash also formulated a universal”solution concept” for many-person ‘”noncooperative” games (meaning those in which has no outside authority assures that players stick to some predetermined rules).His name was thus attached to the whole range of possibilities that might arise from successfully seeing through a rival’s strategy, they have been called “Nash equilibria” ever since. “It was a very deep achievement,”4 said Princeton’s Avinash Dixit, who was among those who nominated Nash for the prize. Nash accomplished many other things, including introducing a formal theory of bargaining into economics (which the Swedes did not mention in the main body of their citation). But he made his way mainly as a pure mathematician, doing widely admired work, exhibiting many of the eccentricities that are associated with the model of that professional type.

Though Thomas Schelling, a University of Maryland economist demonstrated how many game theory concepts could be applied to economics. The awards were given to Harsanyi, 74, and Selten, 64.Both researchers proved important mathematical theorems while refining the concept of Nash equilibria, and Harsanyi in particular has ventured into topics of philosophy. The two economists, Robert W. Fogel and Douglass North, won the Nobel Prize in 1993 were known as pioneering economic historians for economics. These two turned the theoretical and statistical tools of modern economics on the historical past: on subjects ranging from slavery and railroads to ocean shipping and property rights. Fogel, a professor at the University of Chicago, often is described as the father of modern econometric history.

Hes especially noted for using careful empirical work to overturn conventional wisdom. North, a professor at Washington University in St. Louis, was honored as a pioneer in the “new” institutional history. In the Nobel announcement, they specifically mention Norths research in 1968 that showed how organizational changes played a greater role in increasing productivity than did technical change. “The Cambridge native has also written a series of books, including “The Rise of the Western World” in 1971 and “Structure and Change in Economic History,” which set out with clarity how the role of institutional change, and property rights, could be expected to play in a rigorous theory of economic development.”5 Fogel is identified with two issues in particular. There was a 1964 book arguing that the spread of the railroad was not as important to the opening of the American West as had been argued by Joseph Schumpeter and Walt Rostow.Using”counterfactual” arguments (supposing that things had happened differently than they did, and examining what the consequences would have been) and a great deal of benefit-cost analysis, Fogel argued that canals would have done the job just as well as the “iron horse,” which probably contributed no more than 3 percent to the growth of gross domestic product, according to his calculations.

In a second, “Time on the Cross,” written with Stanley Engerman and published in 1974, Fogel argued that the institution of slavery had been more profitable than previously thought. His conclusion influenced a decade of controversy, and he was said to be somehow endorsing slavery. Fogel later published a four-volume study called “Without Consent or Contract,” in which he argued forcefully that slavery ended not because it was economically inefficient, but because it was morally repugnant. “I think it was Bob Fogel who coined the term cliometrics for the application of econometric theory to history,”6 said Harvard University professor John Meyer.

It was Meyer, with a seminal paper on the economics of slavery written with Alf Conrad in 1967, who started the excitement over using the econometric methods that emerged from World War II to the study history. Deeply embedded in Norths theories about economic history is the belief that technical innovations alone are not enough to affect economic development; institutions, such as laws, constitutions, and norms of behavior, play a vital role. He states that “Institutions form the incentive structure of a society, and the political and economic institutions, in consequence, are the underlying determinants of economic performance North also theorized that it is the interaction among such institutions and organizations as political parties, schools, churches, and trade unions that shapes the evolution of an economy.This mean, if the institutional framework rewards piracy, then piratical organizations will come into existence; and if the institutional framework rewards productive activities, then organizations/firms will come into existence to engage in productive activities. In 1968 he applied this theory to the great upswing in productivity experienced by the shipping industry in the 19th century. He showed that the boom was caused not by technical improvements, but rather by efforts to reduce piracy and improve emergency services. North also devoted a lot of time to using his theories to address the question, “Why do some countries become rich while others remain poor? In answering this question North found out that it is essential to understand that history repeatedly demonstrates that the evolution of phenomena including prejudice, myths, and ideologies all play a great role in explaining societies and change.

Towards the end of Norths Study, he merge towards the theory that the past is an ideal testing ground for hypotheses about economics and the various forces that propel economic development.He also specifically stated that “Economic history is about the performance of economies through time,”7 which he stated in his Nobel Peace Prize lecture. The Game Theory and the theory of Economic Development made an impact on the American society that allowed the society to improve in sensibility. Though Nash and North was the main source in creating the theories, the other threes input helped allow the theories to be of more meaning to the society. These two theories has and will continue to influence other perceptions of the American economy because society learn and improve from each other, but the basis will always remain. Therefore, these five recipients will always remain and be remembered as being part of Americas Economic Science history.

Bibliography Business Week, Published, 1994 Harsanyi, John C., Harsanyi Autobiographical Essay Harsanyi, John C., Papers in Game Theory, Published, 1982 New York Times, Published, 1993 Nash, John, Essays on Game Theory, Published, 1997 North, Douglass C., Structure and Change in Economic History, Published 1976 The Boston Globe, Published 1994.