John C. Harsanyi
Harsanyi’s interest in working on game theory was triggered when he read John Nash’s contributions of the early 1950s. He took up where Nash left off. Nash had focused on games in which each player knew the other players’ preferences. Harsanyi wondered how things would change when he introduced the (often more realistic) assumption that players have incomplete information about other players. He assumed that each player is one of several “types.” Each type represents a set of possible preferences for the player and a set of subjective probabilities that that player places on the other players’ types. Each player then chooses a strategy for each of his types. Harsanyi showed that for every game with incomplete information, there is an equivalent game with complete information.
The Nobel committee also noted Harsanyi’s contributions to moral philosophy. As early as 1955, Harsanyi had pioneered the “veil of ignorance” concept (though not by that name) that philosopher John Rawls made famous in his 1971 book, A Theory of Justice. Harsanyi was a strong defender of the “rule of utilitarianism,” the idea that the most ethical act is to follow the rule that will yield the most happiness.
During his early years Harsanyi escaped from two of the twentieth century’s most vicious totalitarian regimes. He grew up in Hungary in the 1920s and 1930s. He had wanted to study philosophy and mathematics, but because he was of Jewish origin and saw Hitler’s steadily rising influence, he took his parents’ advice and became a pharmacy student, knowing that that would help him maintain a military deferment. In the language of game theory, he “looked forward and reasoned back.” After the German army occupied Hungary, he worked in a “labor unit”—that is, he was a slave—from May to November 1944. When the German government tried to deport him to a concentration camp in Austria, he escaped from the railway station in Budapest.
Harsanyi earned his Ph.D. in philosophy at the University of Budapest in 1947 and became a junior faculty member at the University Institute of Sociology. He resigned from the institute in June 1948 because, he recalled, “the political situation no longer permitted them to employ an outspoken anti-Marxist as I had been.” The fact that his wife “was continually harassed by her Communist classmates to break up with” Harsanyi “made her realize … that Hungary was becoming a completely Stalinist country.” In April 1950, he and his wife escaped across the Hungarian border to Austria. “We were very lucky not to be stopped or shot at by the Hungarian border guards,” he wrote.1
Harsanyi moved to Australia, where he spent most of the 1950s. He earned a master’s degree in economics in 1953 and spent two years at Stanford, beginning in 1956, where he earned his Ph.D. in economics. In 1964 he became a professor at the University of California at Berkeley.
About the Author
David R. Henderson is the editor of The Concise Encyclopedia of Economics. He is also an emeritus professor of economics with the Naval Postgraduate School and a research fellow with the Hoover Institution at Stanford University. He earned his Ph.D. in economics at UCLA.