Economist Harsanyi Wins Nobel

A Game Theorist, Professor Emeritus Uses Mathematics to Analyze How People Make Decisions

by Kathleen Scalise and Gretchen Kell

When Professor John C. Harsanyi heard his phone ring at 4:45 am Tuesday morning, Oct. 11, he figured either someone was seriously ill or he'd won the Nobel Prize. Fortunately, it was the second.

Harsanyi, professor emeritus of business administration and economics, was one of three professors awarded the 1994 Nobel Memorial Prize in Economic Sciences. Also winning were John Nash of Princeton University and Reinhard Selten of Rheinische Friedrich-Wilhelms-Univeristät in Bonn, Germany. All were selected for their pioneering work in game theory.

Harsanyi said he was elated to be a Nobelist. However, he knew from other friends "that if you ever win a Nobel Prize, you'll be very busy, busier than you really want to be," he said.

Sure enough, his wife, Anne, said they no sooner placed one call to their son, Tom, a graduate student at Harvard, than the phone was tied up continuously by reporters, friends, and colleagues.

Harsanyi hardly had time to squeeze in breakfast before a press conference was called on campus for more than a dozen reporters and camera crews.

When asked whether it was a total surprise to have her husband receive the Nobel, Mrs. Harsanyi said, "About 99 percent total." The Harsanyis knew that game theory might be so recognized, but they didn't know when it would be or which economists would be selected.

Game theory states that human behavior apparent in games such as chess and poker can be combined with mathematics to make predictions about real-world problems.

"In most economic situations," said Harsanyi, 74, "the outcome and the payoff depend on each participant's own strategy and the strategy of other participants."

Harsanyi's contribution to game theory "is really in circumstances where there is incomplete information," said John Quigley, chair of the economics department. "You know some things about your competitor but not everything. John has shown that you can still make predictions that are useful."

Quigley cited arms control, interest-rate policy, and trade negotiation as areas game theory has influenced.

For his part, Harsanyi no longer plays games, although chess was once a passion. "I haven't played a chess match for several decades," he said. "At one point I lost most of my chess games. Then I realized many of my competitors were memorizing the best moves and I was unwilling to do this."

Instead he used his time to extend what he had learned from chess first to sociology, then philosophy, and finally economics.

It was in the '60s that Harsanyi realized game theory as then conceived had some serious flaws.

"It assumed that you know everything about your opponents," he said. "It occurred to me in order to have reasonable arms control with the Soviet Union, we had to have a model to predict outcomes when you don't know everything about your opponents. They maybe know one thing and you know something else."

Harsanyi himself is no stranger to how dire political problems can be. Born in Budapest, Hungary, in 1920, he lived through the Nazi occupation and the communist takeover. "Finally in 1950 I realized it was too hot for me there," said Harsanyi. "Terrible things were happening in Hungary.... Leaving was the wisest thing I ever did."

After living in Australia for a time, Harsanyi attended Stanford, where he received his PhD in 1959. He began teaching at Berkeley in 1964 as a visiting professor at the business school and became a full professor in 1965. He accepted a joint appointment on the economics faculty in 1966. In 1990, when he retired, Harsanyi won the Berkeley Citation, the highest award the campus bestows on a faculty member.

Of his latest award, Harsanyi said, "I was very pleased...because it's the first Nobel Prize in economics awarded for work in game theory, which is my specialty. I am also very pleased for the other two recipients. It so happens that I met both of them at a conference on game theory at Princeton in 1962."

The news of Harsanyi's award spread rapidly across campus early Tuesday morning. Chancellor Tien said he was "elated" by the announcement.

"Professor Harsanyi has long been recognized as a pioneer in his research on game theory. The Nobel Prize is the ultimate recognition of his work," he said. "This is such a positive reflection on the quality of the faculty at Berkeley."

This is the second Nobel Prize awarded to a Berkeley economics professor and the 16th Nobel won by a member of the faculty. In 1983, Gerard Debreu, an economics and mathematics professor, won the award.

Harsanyi was known as a demanding teacher of courses in economics, management science, and research design for undergraduates, graduate students, and doctoral candidates.


Copyright 1994, The Regents of the University of California.
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