Prof. Robert J. Aumann of the Center for Rationality at Hebrew University of Jerusalem today won the Nobel Prize for Economics for 2005, together with his US colleague, Thomas C. Schelling.
Aumann and Schelling won the prestigious prize for developments in game theory. The prize will be awarded on December 10, the birthday of Alfred Nobel, the inventor of dynamite.
Aumann, a professor emeritus in the Hebrew University Institute of Mathematics, is the second Israeli to win the Nobel Prize for Economics. Daniel Kahneman was awarded the prize in 2002 for developing psychological methods in economic decision-making.
The citation from the Royal Swedish Academy of Sciences says: "In many real-world situations, cooperation may be easier to sustain in a long-term relationship than in a single encounter. Analyses of short-run games are, thus, often too restrictive. Robert Aumann was the first to conduct a full-fledged formal analysis of so-called infinitely repeated games. His research identified exactly what outcomes can be upheld over time in long-run relations.
"The theory of repeated games enhances our understanding of the prerequisites for cooperation: Why it is more difficult when there are many participants, when they interact infrequently, when interaction is likely to be broken off, when the time horizon is short or when others’ actions cannot be clearly observed. Insights into these issues help explain economic conflicts such as price wars and trade wars, as well as why some communities are more successful than others in managing common-pool resources.
"The repeated-games approach clarifies the raison d’etre of many institutions, ranging from merchant guilds and organized crime to wage negotiations and international trade agreements."
Robert Aumann was born in 1930 in Frankfurt. He earned his doctorate in mathematics in 1955 from the Massachusetts Institute of Technology. He has taught mathematics at the Hebrew University of Jerusalem since 1956. He holds dual US and Israeli citizenship.
Further background from the Royal Swedish Academy of Sciences
Published by Globes [online], Israel business news - www.globes.co.il - on October 10, 2005