John von Neumann, the pioneering mathematician and physicist, took a crack at it back in 1944, when he developed the theory of expected utility along with Oskar Morgenstern
. According to this simple theory, people value a possible outcome by multiplying the probability that something happens by the amount they would like it to happen.
Die Entstehungsgeschichte der Spieltheorie aus dem Blickwinkel des Okonomen Oskar Morgenstern. Chur: Ruegger.
Rubenstein Rare Book and Manuscript Library, Duke University (DL): Oskar Morgenstern Papers (OMP).
Leonard traces the evolution of game theory from von Neumann's initial work in Budapest and Berlin through his fortuitous encounter with Oskar Morgenstern
in Princeton in 1940, and then their collaboration on what would become the groundbreaking book Theory of Games and Economic Behavior in 1944.
Some chapter topics include the rise and fall of Walrasian microeconomics and the Keynesian effect, the Cowles Commission as an anti-Keynesian stronghold 1943-1954, the dividing line between Keynesian and new classical macroeconomics, and the ideas of Oskar Morgenstern
. The book's final chapter explores the potential of microfoundations in the making of a new consensus in macroeconomics.
'New Insights into the Collaboration between John yon Neumann and Oskar Morgenstern
on the Theory of Games', History of Political Economy, 24, Supplement, pp.
(18) The second, The Theory of Games and Economic Behavior (TGEB), von Neumann co-authored with Oskar Morgenstern
. In both works, von Neumann applied mathematical theory to economics.
Originally developed by John Von Neumann and Oskar Morgenstern
,(3) game theory involves the actions and strategies pursued by a limited number of parties who lack complete knowledge of and communication with each other.
John von Neumann and Oskar Morgenstern
may not be household names, but their pioneering study, "Theory of Games and Economic Behavior," established a mathematical analysis that concluded there was more to games than, well, fun and games.
Part 4 breaks new ground in presenting chapters on the interwar developments in the Austrian tradition with a general, masterly overview of key developments by Harald Hagemann, followed by chapters introducing new material on Mises's and Hayek's work on business cycles and a fascinating chapter by Chikako Nakayama on Oskar Morgenstern
. Part 5 offers more specialised chapters on the following topics: 'Verstehen' in the writings of Menger and Hayek; Hayek's cognitive psychology; Hayek's critique of socialist planning in the 1930s that was transformed into a critique of general equilibrium theory in his work on competition in the 1940s; and the development of the methodology of economics in the Austrian tradition in the twentieth century in the light of Menger's original contribution.
Von Neumann, John, and Oskar Morgenstern
. Theory of Games and Economic Behavior, Princeton, NJ: Princeton University Press, 1944.