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Retired U-Md. Economist Wins Nobel
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Aumann "is a real game theorist," Schelling said, describing himself as a social scientist who uses game theory as a tool. "It is an honor to be associated with him."
Aumann, who retired in 2001, was born in Germany but holds dual U.S. and Israeli citizenship. He is best known for his analysis of repeated games, in which the willingness of the participants to cooperate is influenced by their expectation that they will be partners or rivals for a long time. This work was useful in understanding how unions and international trade agreements work, the academy said.
"Among Aumann's many contributions, the study of long-term cooperation has arguably had the most profound impact on the social sciences," the academy said. His work yielded "a much deeper understanding of the conditions for cooperation in ongoing relationships" as well as explanations for price wars, trade wars and other economic and social conflict.
Between 1965 and 1968, he collaborated with others in applying game theory to the dynamics of arms control negotiations.
Schelling's seminal book, "The Strategy of Conflict," published in 1960 against the backdrop of the arms race of the 1950s, "had a lasting influence on the economics profession as well as on other social sciences," the academy said.
Schelling said his game theory work grew out of his early experience working for the U.S. government in Europe and at the White House after World War II, when the implementation of the Marshall Plan for rebuilding the devastated continent involved countless negotiations.
The 1994 Nobel Prize in economics went to three early pioneers of game theory, including Princeton University professor John F. Nash Jr., whose personal story was depicted in the Oscar-winning film "A Beautiful Mind" starring Russell Crowe.
The Nobel Prize "validates game theory as a field within economics," said John S. Morgan, a professor of economics and at the business school of the University of California at Berkeley. It is a relatively new field that started after World War II, he said.
Moreover, the award offers recognition that many social achievements "owed a great debt to game theory," said Morgan, who teaches the subject. "Not just achievements that resonate within the academic community, but which resonate in the broader community."
The Nobel winners will split the $1.3 million prize.
