Ariel Rubinstein's Reading List

"The first one I chose was the Theory of Games and Economic Behavior , by John von Neumann and Oskar Morgenstern. There was game theory before von Neumann-Morgenstern, and, as with any field, people are now saying “in 1921 so and so did so and so”. I’m sure at the end of the day, someone will find something relevant also in the Talmud or Greek writings . But von Neumann-Morgenstern was the first comprehensive, systematic attempt to put many game theoretical ideas together. They set up the style, the concepts, some of the basic solution concepts and the level of abstraction. Von Neumann was a brilliant mathematician and Morgenstern was an economist. I imagine if someone else had written the first book – for example a philosopher – game theory could have gone down a completely different path. It’s beautiful to see, the implicit or explicit decisions about the terms and the language. These decisions determined the content and the borders of the field. It’s very difficult to break those borders later. The book does have pretensions. I read from page one: “The purpose of this book is to present a discussion of some fundamental questions of economic theory which require a treatment different from that which they have found thus far in the literature.” It’s an interesting sentence – what does it make us feel? First of all that it’s different, a different set of models than the previous economic models, and that it’s about fundamental questions of economic theory. It was different, we agree on that. It took another 30 years or so for it to be absorbed into the main body of economic theory. So I think this book is definitely on this list of five, because it set the tone and because of its brilliant ideas. These days I use it less and less. After JSTOR it became very easy to search in papers and journal articles but books are hard to search. This is changing now. More and more books are available on the web. The more they are searchable, the more we’ll use them again. It’s a book that has been referenced a lot, though I’m sure most of the references are from people who did not open it. I cannot say I use it daily, and if a student comes and tells me, “I want to learn game theory,” it will not be the first book I’d recommend. That would be a more standard book, that teaches the concepts in a didactic way, summarising what was happening over the past almost 70 years. But in the second wave, I would advise him to read the book, especially if he really wants to get into the theory. People sometimes say, “Book X is the bible of a field.” This is not. I don’t actually know any bible of game theory, and probably it’s good that there isn’t one. Because once there’s a bible in the field, it’s very difficult to make a change. A “bible” might be the beginning and the end of a field."

"This book is written by another two brilliant people, R Duncan Luce and Howard Raiffa. The book was written in the mid-1950s, so about 10 years after von Neumann-Morgernstern and of course it’s a book that was influenced a lot by von Neumann-Morgenstern. It’s a less formal book. It’s written beautifully. It’s a book about which I’m always saying to students, “There are many ideas in there that still have not been developed.” Luce and Raiffa were thinking about elements of what we would probably now call modern choice theory. Standard classical choice theory deals with rationality, ways of applying rationality into decision problems. Their mode of thinking is natural, that’s what I like about this book (and much of game theory in general). It’s really on the bridge between natural thinking and formal thinking. Von Neumann-Morgenstern set the formal models, and Luce and Raiffa went one step back. You can see this in the subtitle of the book, Games and Decisions: Introduction and Critical Survey . The book is dedicated to the memory of von Neumann, but at the same time they did not shy away from criticising the rationality approach. By the way, von Neumann-Morgenstern was not only the beginning of game theory. There is also a very important chapter about the expected utility model. This is the basic model which is still used by almost everybody in economics regarding decision-making under uncertainty. It’s the foundation not just of game theory, but of almost everything in economic theory which involves uncertainty. Luce and Raiffa criticised this theory and suggested some ideas and alternatives which are followed up 30 to 40 years later."

"This collection is interesting for several reasons. Firstly, Bob Aumann is a very special man. I disagree with him about his political views – he is a right-wing person. I disagree with him about his current position on “what game theory is about”. From time to time he expresses views – about politics for example – backed with the authority of the great game theoretician. I don’t like those statements. In spite of this fact, I admire him for his academic work and personality. First of all, there is a beauty in his writing. He’s a master in the way he writes, whatever he writes, and the way he uses formal models to talk about game theory. It’s probably very difficult for someone outside the field to appreciate it, but there is an aesthetic to it. Aumann’s style contrasts the dominating style in current economics. It’s with a lot of – if I may use the word – bullshit, a lot of over-pretensions to be useful. In many current papers in economic theory models are not models, proofs are not proofs. The strive for generality is misleading as every model is not more than a tiny example. Aumann has the ability to use sophisticated mathematical tools more than almost all other game theorists. But he is not tempted. He always tries to think in examples. He’s always striving for the most simple model. Aumann is really a master of using formal models. People ask, “Why is game theory so popular in Israel?” One explanation is Aumann’s charming personality. His role in Israeli game theory reminds me of that of a rabbi in Jewish orthodox communities. Another explanation is the traditions among religious Jews – which have also had an effect on non-religious Jews – of the study of the Talmud. The study of the Talmud is not practical. For example, scholars of the Talmud were studying the question of what to do in the temple place during the entire 2,000 years we were disconnected from Jerusalem. One of the things that is beautiful about the Talmudic thinking is that it’s based on study of examples. The examples are very simple scenarios which demonstrate something deep. I believe that Aumann is influenced by this Talmudic way of thinking."

"This book is completely different. I picked it because when you think about the field you think also about the people who were involved. Of course the story of Aumann, the story of many other people, is interesting, but Nash’s story also has a message. The message is completely separate from game theory, but nevertheless, it happened around the development of game theory. Sylvia Nasar’s book is a brilliant book because she made a deliberate decision not to explain game theory. What she describes is a human drama. Sylvia Nasar was a reporter for the New York Times when she covered the success of the telecommunications spectrum auctions in 1994. The auction was described – in my opinion wrongly – by the popular press and by some game theoreticians as the glorious success of the field of game theory, in terms of making it applicable. But in any case, the success was in contrast to the misery of one of its important contributors, John Nash. The story of John Nash is really a human story – I don’t think it sheds much light on game theory. In a field like economic theory the personality of the author is not relevant to understanding the subject matter. You might not know that Aumann is a religious Jew, you might think he is a Chinese Buddhist, but nevertheless whatever he wrote will still have the same meaning. That’s probably less true about philosophers or writers. That’s both the power and the weakness of formal models. So this book does not help to understand the field better, but it has a human message. It gives hope to people dealing with this terrible mental disease. Because of my involvement in the story of Nash, I came to talk to many people about it, and I feel that the story of Nash gave them a lot of hope. I was marginally involved in the story of Nash in a couple of ways described in the book. One was making him a fellow in the Econometric Society. This was at the time I was at the London School of Economics, in the mid- to late 1980s. The other nominating committee members were open-minded, famous economists. Nevertheless, I was outvoted four to one against making John Nash a fellow. It’s just an honour. But his mental state influenced even that. A year after it was, of course, corrected. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . There’s a big contrast between the attitude to Nash then and now, when Nash is invited to give lectures around the world. His lectures and recovery are important as they give hope to the very large community of people that have family who are sick. He gives an opportunity to people to discuss society’s attitude to mental illness. So I chose A Beautiful Mind as an important human story behind the story of game theory. Yes, but it is not that Nash was the first to use Nash equilibrium. People were using the concept before Nash. But he put it into an elegant framework and showed about it whatever he showed. He did a crucial move but I would be very careful not to say, “Without Nash game theory would not develop.” Without diminishing the importance of it, I don’t think Nash contributed much to the discussion of what Nash equilibrium is."