German-born economist, born in Silesia. He developed the group of mathematical theories known as game theory in conjunction with Hungarian-born US scientist and mathematician John Von Neumann. They co-authored Theory of Games and Economic Behavior (1944)
Morgenstern met Von Neumann at the Institute of Advanced Study, Princeton University, New Jersey, and persuaded him of the potential application of game theory, a structure developed by Von Neumann in the 1920s, to economics. Their book created enormous interest and new applications of their approach to economics, sociology, and law were popular in the 1950s. This initial impetus began to peter out in the 1960s only to regain popularity in the 1970s with the appearance of the non-cooperative game theory. By the end of the 20th century the dominance of game theory in economics, was so marked as to make it one of the principal tools of economic investigation.
Morgenstern was born in Silesia, Germany. He attended high school and university in Vienna, Austria, where he obtained his doctorate in 1925. As director of the Austrian Institute for Business Cycle Research, editor of a leading economic journal, and adviser to the national bank of Austria, he was active throughout the 1930's in pure economic theory and applied research, publishing several articles and two major treatises on economic forecasting. He was dismissed from the University of Vienna in 1938 as a result of the Nazi occupation of Austria and took up a professorship at Princeton University, to work with Neumann, where he remained until his retirement in 1970.
His study of the predictability of economic phenomena resulted in his essay the ‘Accuracy of Economic Observations’ (1950) and an influential study with economist Clive Granger Predictability of Stock Market Prices (1950). He also studied the economics of defence, resulting in several collaborations on books dealing with the peaceful use of underground nuclear explosions, the space shuttle system, and long-term military projections. One of his last publications was a book with the economist and mathematician Gerald Thompson on an early growth model of Neumann entitled Mathematical Theory of Expanding and Contracting Economics (1976).