Ten years ago, on May 23, 2015, John Nash passed away — a mathematician, economist, and Nobel Prize laureate in economics.
Few economists have gained as much popularity as John Nash. This is somewhat paradoxical, as his research did not tackle straightforward or traditionally economic questions.
Born in 1928 into a family with engineering traditions, Nash was interested in mathematics from a young age. He studied at Carnegie Mellon University and later pursued his doctorate at Princeton. His academic work was primarily in mathematics, not economics. Nash became a distinguished economist only when many economists realized that his brilliant discoveries could be applied to economic research.
Nash made a significant contribution to the development of game theory — a branch of mathematics addressing the challenge of studying optimal strategies for players who may have conflicting interests. Game theory advanced rapidly in the mid-20th century and was used to understand social processes, evolution, political conflicts, and resource management problems.
John Nash introduced the concept of “equilibrium,” now known as the “Nash equilibrium.” This concept assumes that, given certain strategies of each opponent, no player can benefit by changing their strategy unilaterally, as each player chooses an optimal solution considering the others’ actions. This idea transformed the interpretation of economic processes and discarded the Darwinian view of the free market as a battlefield where success comes only at the opponent’s expense. It turned out that companies in the market could coexist without engaging, for example, in price wars.
Nash’s contribution — partly unwitting — was a shift in economists’ conceptual framework. While the notion of “equilibrium” was known in macroeconomics (e.g., economies in balance), Nash’s work expanded its application, including microeconomics.
Echoes of Nash’s ideas can be found in the work of other economist-mathematicians like Robert Aumann, who applies game theory to analyze international security issues and even historical events.
Nash’s entire body of work was recognized in 1994 when he was awarded the Nobel Prize in Economics, shared with John Harsanyi and Reinhard Selten.
Interestingly, Nash’s legacy might have remained confined to economists and mathematicians if not for Hollywood. The film A Beautiful Mind, loosely based on Nash’s biography, won four Oscars, five Golden Globes, and many other awards. Watched by millions in cinemas and later on TV and streaming platforms, it helped popularize economics worldwide. The story of a brilliant mathematician who transformed economic thought while battling schizophrenia throughout his adult life made for a compelling film protagonist.
John Nash died alongside his wife Alicia in a car accident on May 23, 2015.
Author: Janusz Wdzięczak
Economist, member of the Polish Economists’ Society (TEP), and lecturer at the Warsaw University of Technology and Business.
Source: CEO.com.pl
