John C. Harsanyi, one of the leading game theorists of his generation, was awarded the 1994 Nobel Prize in Economics jointly with John F. Nash and Reinhard Selten. Harsanyi was also a member of the U.S. National Academy of Sciences, a Fellow of the American Academy of Arts and Sciences, and a Fellow of the Econometric Society.
Harsanyi was born in Budapest and attended the same Lutheran Gymnasium (high school) from which John von Neumann graduated. Harsanyi's parents owned a pharmacy, so he studied pharmacology in college, despite his early interest and evident aptitude in mathematics and philosophy. When the German army occupied Hungary in 1944, Harsanyi narrowly escaped being sent to a concentration camp. After the war, he obtained a PhD in philosophy from the University of Budapest, and he then assumed a junior faculty position at the University Institute of Sociology, where he met his future wife Anne Klauber. By 1950, the Hungarian regime had become wholly Stalinist and, at considerable risk, they managed to cross the border into Austria; some months later, they emigrated to Australia. Harsanyi worked in a factory for 3 years while taking evening courses and earning an MA in economics at the University of Sydney. In 1956, he was awarded a Rockefeller Fellowship for study at Stanford University, where he earned a PhD in economics under the supervision of Kenneth Arrow. Harsanyi's visa required him to return to Australia, where he took a research position at Australian National University. But Harsanyi felt isolated from ongoing work in game theory and, with the help of Arrow and James Tobin, was able to return to the United States to take a faculty position at Wayne State University. He was subsequently offered a position in the Business School at the University of California, Berkeley, where he spent the remainder of his career.
Even before his first visit to the United States, Harsanyi had published important papers that recast utilitarianism in terms of von Neumann-Morgenstern cardinal utility functions. Harsanyi imagined an impartial observer who believes he or she has an equal chance of being anyone in society (complete with that person's utility function) and orders social states accordingly. Making welfare comparisons therefore becomes a problem of individual decision making under risk, and social welfare is maximized when the average utility of all members of society is maximized. Thus, Harsanyi devised the thought experiment of putting a decision maker “behind a veil of ignorance” to make welfare judgments, several years before John Rawls published his earliest work along the same lines. But Harsanyi's impartial observer chooses on the basis of expected utility maximization, rather than Rawls's maximin principle (which Harsanyi later severely criticized).
Beginning with his Stanford dissertation, Harsanyi's work shifted to cooperative game theory. In papers that subsumed and generalized earlier work by Frederik Zeuthen, John Nash, and Lloyd Shapley, Harsanyi proposed a set of “strong rationality” postulates that give a determinate solution for any bargaining game and thereby lead to a measurement of social power. Harsanyi argued that, in the absence of some communication bias, every logically possible coalition forms simultaneously, each defending the common partial interests of its members in a bargaining game with the complementary coalition and that this “principle of full-coalition formation” likely characterizes the broad and long-term operation of the political process in a pluralist society. Harsanyi's book Rational Behavior and Bargaining Equilibrium in Games and Social Situations fully developed this line of work.
Harsanyi subsequently became a leading advocate and analyst of noncooperative game theory, which he came to view as providing greater generality than cooperative theory does. Harsanyi published a series of pioneering papers on games with incomplete information, in which players do not know each other's utility functions. By postulating that each player is one of some finite number of “types,” each of which has its own utility function, and that players have consistent beliefs on the distribution of types, Harsanyi demonstrated that every game with incomplete information is equivalent to some larger game with complete information, which can then be solved by standard methods. This approach is now a standard tool of information economics, including the strategic analysis of auctions. Harsanyi subsequently used this approach to provide a new and more satisfying interpretation of mixed strategy equilibria in noncooperative games and to develop a tracing procedure to identify a unique equilibrium in any noncooperative game. The latter effort was most fully developed in his book A General Theory of Equilibrium Selection in Games, coauthored with Reinhard Selten.
Harsanyi's goal was always to seek the greatest possible degree of analytical generality. His ultimate aim was to define a unique solution concept that could be applied in all games with two or more players, cooperative or noncooperative, zero-sum or variable sum, and with complete or incomplete information and, in his productive scholarly life, he largely accomplished this goal.
Bargaining, Game-Theoretical Approaches to Power, Noncooperative Games
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