Game Theory Term Analysis

No one was more obsessed with originality, more disdainful of authority, or more jealous of his independence. […] In almost everything [Nash] did—from game theory to geometry—he thumbed his nose at the received wisdom, current fashion, established methods. […] Nash acquired his knowledge of mathematics not mainly from studying what other mathematicians had discovered, but by rediscovering their truths for himself.

Today, Nash’s concept of equilibrium from strategic games is one of the basic paradigms in social sciences and biology. […] Like many great scientific ideas, from Newton’s theory of gravitation to Darwin’s theory of natural selection, Nash’s idea seemed initially too simple to be truly interesting, too narrow to be widely applicable, and, later on, so obvious that its discovery by someone was deemed all but inevitable. […] Its significance was not immediately recognized, not even by the brash twenty-one-year-old author himself.

The prize itself was a long-overdue acknowledgment by the Nobel committee that a sea change in economics, one that had been under way for more than a decade, had taken place. As a discipline, economics had long been dominated by Adam Smith’s brilliant metaphor of the Invisible Hand. Smith’s concept of perfect competition envisions so many buyers and sellers that no single buyer or seller has to worry about the reactions of others. […] But in the world of megamergers, big government, massive foreign direct investment, and wholesale privatization, where the game is played by a handful of players, each taking into account the others’ actions, each pursuing his own best strategies, game theory has come to the fore.