Nobel Peace Prize Winners

Nobel Peace 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. 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. He’s 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 North’s 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 North’s 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 North’s 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
three’s 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 America’s 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

Economics

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