The Economic Nobel

Thomas C. Schelling of the University of Maryland and Robert J. Aumann of Hebrew University have taken home the 2005 Nobel Memorial Prize in Economic Sciences. Working separately, they used game theory to explain how people and countries interact. Schelling's work formed part of the basis for the "mutually assured destruction" strategy at the heart of U.S. Cold War nuclear strategy. Explains the Wash Times:

Mr. Schelling's theories helped to shape Cold War policy, particularly the concept of "mutually assured destruction" in an exchange of nuclear weapons.

"My main source of optimism is that the Soviet Union faced some of its gravest challenges without ever resorting to nuclear weapons," Mr. Schelling said. "It was not a foregone conclusion they would honor this nuclear taboo with their backs to the wall."

More here.

Earlier this year in EconJournalWatch, economists Dan Klein, Tyler Cowen, and Timur Kuran argued that Schelling deserved a Nobel based on his wide-ranging influence:

THOMAS SCHELLING HAS BEEN ONE OF THE, AND IN MANY CASES the, pioneer in developing the following ideas: coordination concepts, focal points, convention, commitments (including promises and threats) as strategic tactics, the idea that strategic strength may lie in weaknesses and limitations, brinkmanship as the strategic manipulation of risk, speech as a strategic device, tipping points and critical mass, path-dependence and lock-in of suboptimal conventions, self-fulfilling prophecy, repeated interaction and reputation as a basis for cooperation, the multiple self, and self-commitment as a strategic tactic in the contest for self-control.

Perhaps even more impressive, Klein et al. argue, is Schelling's committment to the human dimension in a field notorious for willing away complex human psychology and replacing it with math:

Schelling seems to say that being human is an open-ended process, and our theories should be populated by these open-ended creatures. No machine or mathematical function can, by itself, approximate the human being.

Their prescient brief is online here. (Hat tip: Adrian Moore)

Over the years, Reason has interviewed many Nobel winners in economics, including F.A. Hayek, Milton Friedman, Vernon Smith, and Ronald Coase. We've also published work by James M Buchanan (on communitariansim) and James J. Heckman (on the analytical and methodological failures of The Bell Curve).

And we're getting to the rest.