John nash economics contribution
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John Forbes Nash Jr.
American mathematician (–)
John Forbes Nash Jr. (June 13, &#;– May 23, ), known and published as John Nash, was an American mathematician who made fundamental contributions to game theory, real algebraic geometry, differential geometry, and partial differential equations.[1][2] Nash and fellow game theorists John Harsanyi and Reinhard Selten were awarded the Nobel Prize in Economics. In , he and Louis Nirenberg were awarded the Abel Prize for their contributions to the field of partial differential equations.
As a graduate student in the Princeton University Department of Mathematics, Nash introduced a number of concepts (including Nash equilibrium and the Nash bargaining solution) which are now considered central to game theory and its applications in various sciences. In the s, Nash discovered and proved the Nash embedding theorems by solving a system of nonlinear partial differential equations arising in Riemannian geometry. This
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John Nash, john harsanyi, and reinhard selten shared the Nobel Prize in economics “for their pioneering analysis of equilibria in the theory of non-cooperative games.” In other words, Nash received the Nobel prize for his work in game theory.
Except for one course in economics that he took at Carnegie Institute of Technology (now Carnegie Mellon) as an undergraduate in the late s, Nash has no formal training in economics. He earned his Ph.D. in mathematics at Princeton University in The Nobel Prize he received forty-four years later was mainly for the contributions he made to game theory in his Ph.D. dissertation.
In this work, Nash introduced the distinction between cooperative and noncooperative games. In cooperative games, players can make enforceable agreements with other players. In noncooperative games, enforceable agreements are impossible; any cooperation that occurs is self-enforced. That is, for cooperation to occur, it must be in each player’s interest
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A two-page paper published by John Nash in is a seminal contribution to the field of Game Theory and of our general understanding of strategic decision-making. That paper, “Equilibrium points in N-person games”, introduced a cornerstone concept which came to be known as Nash equilibrium.
Game theory is concerned with situations where decisions interact – where the “payoff” or reward for a decision maker depends not only on his or her own decision but also on the decisions of others.
Such situations are pervasive in real life. The payoff for a buyer in an auction, for example, depends not only on the amount he bids but also on the bids of the other buyers. If the buyer’s bid is not the highest, then he loses the auction. Likewise, the profit realised by a firm depends not only on the price it sets for its product but also on the prices set by its competitors. In a tennis match, the likelihood the server will win a point depends on whether she delivers the serve to the receiver’s le