for genius, a theory, or simply patterns
Reflections on John Nash and game theory
By Daniel A.
When I was a Princeton undergraduate, Professor John Nash *50,
the subject of the movie A Beautiful Mind, was a shadow figure in
a knit cap who haunted the Fine Hall math department.
Nash sightings at the Dinky train station, in Small World
coffee shop, on his slowly looping bicycle rides were a regular
pastime. We called Nash the "Phantom of Fine Hall" and
whispered in wonder that this aging man in goggle eyeglasses and
faded Jack Purcell shoes had won a Nobel Prize in economics.
A Beautiful Mind is bringing deserved mainstream recognition to
Nash's long struggle to overcome schizophrenia. But moviegoers will
leave the film with little sense of Nash's mathematical genius,
save knowing that his contribution to modern economics can help
pick up a girl at a bar.
It is axiomatic in mathematics that genius blossoms early, and
so students entering Princeton's math department, one of the world's
best, are all seeking the next great insight.
As rendered in A Beautiful Mind, when math prodigy John Nash arrived
at Princeton, he searched for patterns in the pecking of pigeons.
Nash found his stroke of genius at age 21 in a 27-page dissertation
on game theory that would fundamentally revolutionize modern economics
and eventually win him a Nobel.
My classmates and I may have had genius on our mind several years
back, when we entered our 9 a.m. calculus class in Fine Hall tower.
At 9:05 a.m., a rumpled man in loose jeans and an untucked button
down brushed aside the classroom door and flung off his sandals,
which smacked against the wall. He turned barefoot to the blackboard
and began writing equations, pausing only to survey his work with
a mumble or wipe chalk handprints on his jeans.
Fifty minutes later, Professor John Conway put down his chalk,
put on his sandals and walked out.
That was our first lecture ever as Princeton freshmen. Half the
class had dropped out by the next lecture.
Before Nash, economists studied the market using sophisticated
versions of Adam Smith's price theory -basic supply and demand.
Smith said as buyers and sellers pursue their self-interest, the
"invisible hand" of the market distributes products efficiently.
But price theory can't explain the abundant real-world examples
of market inefficiency. Nash approached this problem by reformulating
economics as a game.
To most people, a game is a way to while away a rainy afternoon.
But to mathematicians, a game is not just chess or poker but any
conflict situation that forces participants to develop a strategy
to accomplish a goal. To mathematicians, a game is a regimented
world where math is king. And a game can be a window to mathematical
insight. When I was a student, Princeton math professors collected
every afternoon in the third-floor lounge for tea and a round of
backgammon. Professor Conway told us that he stumbled upon the discovery
of a lifetime while studying Go, an ancient board game played with
smooth stones. Nash's central insight, the one for which he won
a Nobel Prize in 1994, was to prove that every economic game has
an equilibrium point that is, an approach to play in which
no player would choose to change his strategy. If a player were
to try to change his Nash equilibrium strategy, he would end up
worse off than before.
Nash built on previous insights, particularly those of John von
Neumann, another brilliant and brash mathematician who was a professor
at the Institute for Advanced Study near Princeton when Nash was
a graduate student.
Like the shoe-shucking Conway, von Neumann was an eccentric instructor.
Instead of using the whole blackboard, von Neumann would write an
equation then immediately erase it and write another as students
frantically took notes. "Proof by erasure," his students
called it. The same year Nash was born, 1928, von Neumann showed
that in simple games like checkers or football, where one player's
gain is the other's loss, rational players will tend toward a strategy
that, even in a worst-case scenario, guarantees a minimum gain or
caps a potential loss. That translates to conservative play
to a brand of football where teams prefer the extra point to the
two-point conversion and always punt on fourth and inches.
THE GAS STATION GAME
Take the case of two gas stations being built in a small town
made up of a single, one-mile long Main Street.
Town planners agree the gas stations should be placed at one-quarter
and three-quarter mile marks, so that no one in town has to drive
more than a quarter mile to fill up. And since residents are distributed
evenly along Main Street, both stations would share exactly half
the business in town. But try explaining that to the station owners.
The owner who should build at the one-quarter mile mark knows people
at his end of town will never go to the competing station because
it's too far away. So he'd want to build closer to the center of
town to dip into his competitor's mid-town market. Of course, the
other owner is equally wily, and he, too, edges his station closer
to the center of town. Game theory tells us and an astute
business sense dictates that the two gas stations will both
end up on the same corner in the exact center of Main Street. The
equilibrium solution of the gas station game is clearly not the
most efficient. While the stations still share half the town's business,
people on the edge of town have to drive farther to get gas under
equilibrium than under the town planners' solution.
But neither owner would have it any other way, because being located
in the center of town is the most secure solution for each. This
equilibrium is an example of free market inefficiency and
a critique of Adam Smith's invisible hand.
Though insightful, von Neumann's analysis of situations like the
gas station game had limited real-world application because his
theory couldn't accommodate even slight complications to a game.
Nash, however, showed that even complicated games have an equilibrium
He proved that participants in complex economic situations tend
toward a specific, secure strategy, and he provided an elegant mathematical
framework for figuring out that strategy.
That apparently simple insight transformed game theory from an
abstract subset of mathematics to a powerful new approach to the
study of economic decision-making.
THE NUCLEAR STANDOFF
Nash's revolutionary insights weren't immediately accepted or
even understood. When von Neumann first heard Nash's ideas, he told
Nash they were "trivial" math's harshest putdown.
But over the years, even as Nash dropped math in his struggle with
schizophrenia, his ideas took hold. These days, Nash-style strategic
thinking can be found everywhere.
Consider America's nuclear standoff with the Soviet Union. Each
superpower could disarm or stockpile a nuclear arsenal. To decide,
the U.S. considered what the Russians might do. If the Soviet Union
armed, the U.S. needed to arm as well to defend itself. But if the
Soviet Union disarmed, the U.S. would rather arm itself anyway to
achieve a strategic advantage over its enemy.
The Soviet Union's thinking ran the same way, and both countries
settled on a policy of mutually assured destruction. Despite pacifist's
complaints, a nuclear standoff was the most stable and secure solution
the Cold War's Nash equilibrium.
Professor Conway was certainly thinking strategically that first
An impatient genius like Conway would want to cull out the less
confident and less talented, leaving a class of the curious and
the quick. And students who stayed were willing to risk torture
by erasure to be near the glow of genius.
In later lectures, Conway threw down his chalk to digress on mathematical
history, ran his hand through his hair to indulge in mathematical
fascinations, ignored the course requirements to share his mathematical
He taught us that math is not the sawdust we learned in grade
school but a passionate, and personal, subject.
One class, he told us that while searching for patterns in Go,
he discovered surreal numbers: an entirely new class of numbers
able to express the infinitely small and infinitely large with an
unprecedented specificity. That semester, Professor Conway taught
us that whether it is the pecking of pigeons or the placement
of Go stones the thing in math is the search. For, as Nash
and Conway both prove, you never know what you might find.
Daniel A. Grech is a staff writer at the Miami Herald and can
be reached at email@example.com