Retired U-Md. Economist Wins Nobel

A retired University of Maryland professor shared the Nobel Prize in economics yesterday for his work developing game theory and spreading its use as a tool for preventing conflict and encouraging cooperation among people.

Thomas C. Schelling, 84, who retired from the university in 2003, won the award with mathematician Robert J. Aumann, 75, who retired in 2001 from Hebrew University of Jerusalem, Israel, for their analyses of how individuals, countries and businesses make decisions while anticipating the likely response by others.

Game theory has been well studied for decades in Washington as a tool for developing military strategies, such as how to deter or respond to another country's acquisition or use of nuclear weapons. It is also used to explain political campaign tactics, price wars, trade negotiations and the challenges of reaching international environmental agreements.

Schelling's work "had a profound impact on military theorists and practitioners in the Cold War era, played a major role in establishing 'strategic studies' as an academic field of study and may well have contributed significantly to deterrence and disarmament among the superpowers," said the Royal Swedish Academy of Sciences, in an article explaining its selection of the prize winners.

One key principle in Schelling and Aumann's work was the ability of two parties to avoid war through credible threats and counter-threats. During the Cold War, for example, the United States and the Soviet Union were able to deter each other from launching a nuclear attack by indicating that they had the ability and willingness to launch a counterattack.

Game theory lends itself to games such as bridge, or even a driver's strategy in a traffic jam, in which "the important play depends on what one anticipates the partner or adversary would do," Schelling said during a news conference at the University of Maryland's College Park campus. "Game theory can be used if you try to discipline a child or deal with employees, or employers or neighbors."

One current example, he said, is the possibility of using game theory to figure out how to create an international agreement to reduce the greenhouse gases many scientists think contribute to global warming. The U.S. government is unlikely to join any treaty that involves sanctions or penalties, he said. But the NATO alliance is an encouraging example of how countries can be induced to make long-term commitments in their self-interest and largely live up to them without punitive measures, he said.

Game theory, however, is less useful in analyzing how to deter terrorists from using nuclear weapons, he said, because "it is difficult to figure out what their objectives are."

Schelling also is well known for a 1971 article analyzing how racially mixed communities can suddenly become segregated as the proportion of residents of one race gradually slides below a certain critical level, or "tipping" point, the Swedish academy noted. This provided "a convincing account of an important social policy problem . . . an early analysis of 'tipping.' "

University of Maryland officials "could not be more thrilled," Provost William W. Destler told reporters. Schelling came to the university in 1990 after 32 years at Harvard University, where he conducted his most influential work. He retired from the University of Maryland in 2003 after teaching in the economics department and school of public policy.

"For us, it was never a question of whether Tom would win the Nobel Prize, it was just a matter of when," Destler said at the news conference attended by Schelling's wife, Alice, university officials and former colleagues.

Schelling said he and Aumann have never worked together but are good friends.