The success of the film A Beautiful Mind propelled the name of
schizophrenic American economist John Nash to the attention of a
worldwide audience. But few people are aware that Nash shared his
Nobel Prize in 1994 with a masters graduate in economics from the
University of Sydney, John C. Harsanyi.
Harsanyi was born in Budapest in 1920 and fled to Australia in
1950. Of Jewish descent, he survived the last year of the war in
a Nazi forced labour camp, only to find himself persecuted by the
communists for his anti-Marxist views as an assistant professor
of sociology at Budapest University.
After arriving in Sydney, and with only limited English, he worked
in a succession of labouring jobs, later admitting that his "utter
lack of manual dexterity" made these rather short-lasting.
But in the evenings he attended lectures at the University, receiving
partial credit for his Hungarian qualifications, and completed the
masters course in two years instead of the usual four.
He recalled in his autobiography for the Nobel Foundation: "I
changed over from sociology to economics because I found the conceptual
and mathematical elegance of economic theory very attractive."
was particularly interested in the work on game theory being carried
out by John Nash, who published four papers on the subject while
Harsanyi was studying at Sydney. Game theory applies the same mathematics
that can be used to predict the outcome of games like poker and
chess to economic and political situations.
Harsanyi's contribution to the work was to extend the theory to
games and situations where players lack complete information about
each other or the rules of the game. This greatly increases its
usefulness in situations of political and economic conflict, and
in the 1960s Harsanyi had the opportunity to put his theories into
practice as an adviser to the US government on arms control negotiations.
Dr Yanis Varoufakis, a senior lecturer in the Faculty of Economics
and Business, explained the impact of Harsanyi's work:
liberated game theory, in particular, and economics, more generally,
from the accusation that its theories apply only when individuals,
firms and others are acting in an environment where everything that
can be known is known.
"Harsanyi changed all this by extending these theories in
such a manner that they could, all of a sudden, handle considerable
uncertainty concerning all sorts of parameters, such as demand levels
at different prices, costs, temperament of others and so on.
"By blending probability theory with John Nash's notion of
equilibrium, he gave economics an impetus that it had hitherto lacked."
Harsanyi received an MA from Sydney in 1953, writing his thesis
on Inventions and Economic Growth, before moving to the US in 1956
where he became a professor at the University of California Berkeley.
He returned to Sydney University in 1995 to receive an honorary
doctorate in economics.
Well into the 1990s he continued to work on his theories in the
US, where he was known for dazzling originality, philosophical insight
and technical competence. He died in 2000.