Economics Nobelist Nash did early work at MIT


John F. Nash, one of the three co-recipients of the 1994 Nobel Memorial Prize in Economic Science, did seminal work in the field of game theory as a young faculty member in the MIT mathematics department.

After receiving his PhD in mathematics at Princeton University, Dr. Nash came to MIT as a C.L.E. Moore instructor in mathematics in 1951. He became an assistant professor in 1953 and was promoted to associate professor in 1957. While on the mathematics faculty, he regularly interacted with colleagues in the economics department including Paul A. Samuelson and Robert M. Solow, who also have received Nobel prizes.

Dr. Isador M. Singer, Institute Professor and professor of mathematics, shared an office with Dr. Nash and remembers him as "brilliant" and doing "fundamental work" in pure mathematics as well as game theory.

Dr. Nash left the Institute in 1959 and has spent most of the years since at Princeton.

In the field of game theory, the strategy behind games like poker and chess is used to understand how "players" behave in real-life economic "games" such as trade wars or business competition. The idea, as one economist explained it, is to think hard about what you think your opponent will do, and then plan a strategy based on that. The theory has been extended beyond economics to embrace a wide range of activities, including military planning.

Game theory was marked out half a century ago by John Von Neumann and Oskar Morgenstern. However, Dr. Nash is widely credited with transforming it into a useful tool for economists and others, beginning with publication of his PhD thesis, "Non-Cooperative Games," in the journal Annals of Mathematics.

The New York Times said Dr. Nash is widely regarded as "the rock on which the mathematics of game theory was built."

David Warsh, economics writer for The Boston Globe, said Dr. Nash was a young faculty member at MIT when he "notched the first formal breakthrough" in the field. This occurred Warsh, said "when he succeeded in generalizing a set of problems known to economists since the 1840s, when Augustine Cournot began writing about what might happen when two big companies collide with one another in the marketplace.

"Nash formulated a universal `solution concept' for many person `non-cooperative' games (meaning those in which 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 when successfully seeing through a rival's strategy." These have become known as "Nash equilibria."

Game theory is not his only achievement in economics. According to Warsh, his accomplishments included introducing into economics a formal theory of bargaining.

He shared the 1994 Nobel prize with two other pioneers in game theory, John C. Harsanyi of the University of California at Berkeley and Reinhard Selten of the University of Bonn in Germany.

A version of this
article appeared in the
October 19, 1994

issue of MIT Tech Talk (Volume
39, Number
8).


Topics: Economics, Nobel Prizes

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