Academic Games Can Be Rewarding

Click here to listen to this feature  

The 2005 Nobel Prize for Economics was awarded to mathematics professor Robert Aumann for his work in applying game theory to enhance our understanding of probable outcomes in situations involving conflict and cooperation.

Game theory was originally developed by mathematician John von Neumann.  He loved games of strategy like chess and poker, and developed a mathematical way to describe their structure.  He realized that his ‘game theory' also provided a scientific basis for the study of situations in the real world – like developing a strategy to fight the so called "cold war" in the 1950's and ‘60's.

Game theorists study how cooperation evolves over time, even among people who don't care about others, but who have to live with the consequences of others' decisions.

Game theory helps us understand how selfish people develop cooperative behaviour, and so is used to help disputing parties cooperate through an impartial mediator.  It also helps explain why two selfish drivers, whose goal is to race home as quickly as possible, still need to act strategically and cooperate by heeding all the traffic rules.

The ideas of game theory have been applied to international trade policy, dealing with criminals, and many situations involving people where we have incomplete information about what others might do.